Sports Collectors Guild Incorporated et al v. Bank of America NA

MOTION to Dismiss Case

D. Ariz.August 5, 2016

802928.12\0546448 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B r ya n C a v e L L P T w o N o r t h C e n t r a l A v e n u e , S u it e 2 2 0 0 P h o e n ix , A r iz o n a 8 5 0 0 4 -4 4 0 6 (6 0 2 ) 3 6 4 -7 0 0 0 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Sport Collectors Guild, Inc., and Patrice Lagnier, Plaintiffs, vs. Bank of America, N.A., an Arizona limited liability company, Defendant. No. 2:16-cv-02229 MOTION TO DISMISS Defendant Bank of America, N.A. (erroneously named as “Bank of America, N.A., an Arizona limited liability company”) (“BANA”) requests an order dismissing the case on the grounds that it is res judicata; specifically, it attempts to re-litigate the very issues, legal arguments, and defenses that the Maricopa County Superior Court denied in another action between the parties. The claims also are collaterally estopped, and the statute of limitations bars Claims III and IV. Even if the statute of limitations did not bar those two claims, the results of the parties' previous litigation held that the conduct to which Plaintiffs Sport Collectors Guild ("Sport Collectors") and Patrice Lagnier ("Lagnier") attribute their tort injuries was lawful, so Plaintiffs cannot seek recovery for injuries BRYAN CAVE LLP, #00145700 Robert W. Shely (No. 014261) Jacob A. Maskovich (No. 021920) Teresa P. Meece (No. 032071) Two North Central Avenue, Suite 2200 Phoenix, Arizona 85004-4406 Telephone: (602) 364-7000 Fax: (602) 364-7070 rwshely@bryancave.com jmaskovich@bryancave.com teresa.meece@bryancave.com Attorneys for Bank of America, N.A. Case 2:16-cv-02229-ROS Document 11 Filed 08/05/16 Page 1 of 12 2 802928.12\0546448 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B r ya n C a v e L L P T w o N o r t h C e n t r a l A v e n u e , S u it e 2 2 0 0 P h o e n ix , A r iz o n a 8 5 0 0 4 -4 4 0 6 (6 0 2 ) 3 6 4 -7 0 0 0 allegedly incurred as a result of lawful conduct. Counsel for BANA and Plaintiffs met and conferred, verbally and in writing, in good faith on several occasions, where BANA sought Plaintiffs' agreement to dismiss the action with prejudice. The parties were unable to resolve their differences. MEMORANDUM OF POINTS AND AUTHORITIES I. BACKGROUND A. Generally -- The Parties' Previous Litigation On June 11, 2010, BANA filed an action in Maricopa County Superior Court against Plaintiffs seeking repayment of Sport Collector's and Lagnier's debt obligation to BANA, Maricopa County Case No. CV2010-014385 (the “Previous Action”)1. BANA subsequently filed a motion for summary judgment. Sport Collectors and Lagnier opposed the motion by arguing that BANA had materially breach the parties' agreement by failing to pursue arbitration in accordance with an arbitration provision. Bank of Am., N.A. v. Sport Collectors Guild, Inc., No. 1 CA-CV 12-0804, 2014 WL 173516, at *1 (Ariz. Ct. App. Jan. 16, 2014). BANA argued that Sport Collectors and Lagnier had waived or failed to preserve the defense, and the trial Court agreed, granting summary judgment. Id at *2. The Court of Appeals, however, reversed the trial court’s decision, by ruling that an arbitration provision within the underlying contract between the parties applied to the parties’ dispute. See Exhibit 1: 2014 WL 173516 (Ariz. Ct. App. Jan. 16, 2014) (containing case background). The Court of Appeals did not rule that the parties must 1 The Court may consider these and subsequent public records without converting this Motion into a Motion for Summary Judgment because matters of public record are properly subject to judicial notice. See Pesci v. IRS, 67 F. Supp. 2d 1189, 1191-92 (D. Nev. 1999), aff’d, 225 F.3d 663 (9th Cir. 2000). Further, the Court may consider the Complaint filed in Case No. CV2010-014385, as well as all other documents attached to this motion which were filed in the Maricopa County Superior Court because each is a court record that is properly subject to judicial notice. See Smith v. Duncan, 297 F.3d 809, 815 (9th Cir. 2002) (taking judicial notice of state court documents); Burbank-Glendale- Pasadena Airport Auth. v. City of Burbank, 136 F.3d 1360, 1364 (9th Cir. 1998) (taking judicial notice of state court filings). Case 2:16-cv-02229-ROS Document 11 Filed 08/05/16 Page 2 of 12 3 802928.12\0546448 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B r ya n C a v e L L P T w o N o r t h C e n t r a l A v e n u e , S u it e 2 2 0 0 P h o e n ix , A r iz o n a 8 5 0 0 4 -4 4 0 6 (6 0 2 ) 3 6 4 -7 0 0 0 arbitrate their dispute, but only remanded for "further proceedings consistent with this decision." Id at *3. The Court of Appeals issued its Mandate on February 25, 2014. In an order filed on March 20, 2014, the trial court in the Previous Action, responding to the Court of Appeals, ordered "that the parties proceed to arbitration on the claims set forth in the Complaint." Exhibit 2 (Order filed on March 20, 2014). The Court further ordered the matter stayed and "plac[ed] it on the inactive calendar for dismissal without further notice after December 31, 2014 unless" the parties submitted an arbitration order for confirmation or sought an extension of that deadline. Id. The Complaint alleges that "[i]nstead of resolving its claim against plaintiffs in arbitration as ordered by the trial court and Arizona Court of Appeals," BANA submitted a "Guaranty Request with the U.S. Small Business Administration for purposes of collecting the $146,798.61 judgment (plus costs and fees) that the Court of Appeals had vacated on January 16, 2014." Doc. 1-1 at p. 9, ¶ 41. Unhappy with BANA’s decision not to arbitrate the matter and to submit a guaranty request to the SBA, Sport Collectors and Lagnier moved in the previous action for sanctions against BANA by filing, on November 13, 2014, a “Defendants’ Motion for Order to Show Cause re: Contempt and Sanctions pursuant to A.R.S. § 12-864.” Exhibit 3. They argued that the Court's order of March 20, 2014 required BANA to arbitrate its claims. Ex. 3 at p. 3. That is, they claimed that BANA had no right to abandon its judicial strategy, and it had to pursue a judicial strategy no matter what based upon the Mandate and the trial court's subsequent order of March 20, 2014. They also raised their concerns about BANA's conduct in seeking relief directly from the SBA: "on information and belief, the SBA has recommended approval of Bank of America's guaranty request." Ex. 3 at p. 3:3-4. But the trial court denied the motion: “Defendants now complain, first, that [BANA] has not proceeded to arbitration. That is [BANA's] choice; if it wished to abandon its direct claims against defendants, there is nothing to stop [BANA] from doing so (and abandonment of the direct claims via inaction is certainly consistent with the Case 2:16-cv-02229-ROS Document 11 Filed 08/05/16 Page 3 of 12 4 802928.12\0546448 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B r ya n C a v e L L P T w o N o r t h C e n t r a l A v e n u e , S u it e 2 2 0 0 P h o e n ix , A r iz o n a 8 5 0 0 4 -4 4 0 6 (6 0 2 ) 3 6 4 -7 0 0 0 Court of Appeals’ mandate). Such an action is certainly no basis for a finding of contempt." Exhibit 4 (February 4, 2015 Ruling, filed February 6, 2015) at p. 1. The Superior Court ruled further: “Second, defendants complain that [BANA] has submitted a ‘guaranty request’ to the Small Business Administration pursuant to a federal program, and that [Sport Collectors and Lagnier] will be liable to the government pursuant to federal regulations if the government honors this request. Again, there is nothing to stop [BANA] from seeking relief from the SBA outside of arbitration, and the fact that doing so might have collateral consequences for defendants is irrelevant.” Id. at p. 2. On February 10, 2015, Sport Collectors and Lagnier filed a motion for reconsideration of their motion for sanctions, which the trial court denied on February 12, 2015 (filed February 20, 2015): "As noted in the Court's minute entry of February 4, 2015, [BANA] is entitled to take advantage of federal programs, and the fact that doing so might have collateral consequences for defendants is irrelevant." Exhibit 5 (February 12, 2015 Ruling, filed February 20, 2015). Sport Collectors then filed a “Defendants’ Renewed Motion for Order to Show Cause Re Contempt and Sanctions Pursuant to § A.R.S. 12-864,” on the same grounds, on March 13, 2015. Exhibit 6. The trial court also rejected that request: "The motion in fact constitutes a motion for reconsideration, and the court has already explained (twice) that nothing in the arbitration agreement precludes [BANA] from seeking relief from a government agency under federal regulations. Nothing presented by defendants in the latest motion changes that analysis." Exhibit 7 (March 24, 2015 Dismissal Calendar Order, filed March 31, 2015) at p. 1. The court noted further: "Finally, because it appears obvious that the parties are not proceeding to arbitration on the claims between them, IT IS ORDERED placing this matter on the dismissal calendar for dismissal without further notice on April 15, 2015 absent a showing of good cause to further keep this matter on the court's docket." Id. On April 14, 2015, just a day before the case would have been dismissed from the inactive calendar, Sport Collectors and Lagnier filed a "Defendant's Request for Case 2:16-cv-02229-ROS Document 11 Filed 08/05/16 Page 4 of 12 5 802928.12\0546448 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B r ya n C a v e L L P T w o N o r t h C e n t r a l A v e n u e , S u it e 2 2 0 0 P h o e n ix , A r iz o n a 8 5 0 0 4 -4 4 0 6 (6 0 2 ) 3 6 4 -7 0 0 0 Permission to Supplement Their First Amended Answer, Pursuant to Ariz. R. Civ. P. 13(e) and 15(d)." Exhibit 8. They claimed that they had a counterclaim against BANA, in light of the Arizona Court of Appeals decision of January 16, 2014, for breach of the arbitration agreement. Id. at p. 2:26-28, 3:1-4. They also argued that they had claims against BANA for "breach of the covenant of good faith and fair dealing, abuse of process, intentional infliction of emotional distress and negligence." Id. at p. 3:5-8. The trial court rejected that motion, too, when issuing its final Judgment of Dismissal on May 27, 2015 (filed June 3, 2015): By minute entry dated March 24, 2015, the court placed this matter on the dismissal calendar for dismissal without further notice on April 15, 2015 absent a showing of good cause to further keep this matter on the court's docket. No such showing having been made, IT IS ORDERED dismissing this matter without prejudice. The Request for Permission to Supplement Their First Amended Answer (file April 14, 2015) is DENIED as MOOT. Exhibit 9. Sport Collectors and Lagnier filed, but subsequently abandoned, their appeal. Exhibit 10 at p. 2:16-18; see also Exhibit 11 (Court of Appeals August 26, 2015 Entry). When they abandoned their appeal, they let stand in place the trial court's rulings regarding the arbitration and BANA's decision to seek relief from a federal agency, both of which the trial court had concluded were lawful actions. B. This Litigation Sport Collectors and Lagnier filed this action in state court on or about June 14, 2016. BANA timely removed it on July 7, 2016. Doc. 1. The Complaint set out the factual background underlying the Previous Action, including the arbitration provision in the parties' agreements and Sport Collector's efforts to require BANA to resolve its disputes in arbitration. Doc. 1-1 at 5-8, ¶¶ 5-28. The Complaint further described BANA's motion for summary judgment, the Court of Appeals' reversal of the trial court, the remand of the case to the trial court, the trial court's order that BANA arbitrate if it wanted to resolve the case through judicial means, the claim that BANA declined to arbitrate, and the fact that BANA sought relief, instead, from the SBA. Id. at 8, ¶¶ 29-30. Case 2:16-cv-02229-ROS Document 11 Filed 08/05/16 Page 5 of 12 6 802928.12\0546448 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B r ya n C a v e L L P T w o N o r t h C e n t r a l A v e n u e , S u it e 2 2 0 0 P h o e n ix , A r iz o n a 8 5 0 0 4 -4 4 0 6 (6 0 2 ) 3 6 4 -7 0 0 0 The Complaint alleged that BANA "ignored the orders of the trial court and the Arizona Court of Appeals and did not attempt to resolve its claim against plaintiffs in arbitration." Id. at 9, ¶ 40. The Complaint further alleged that BANA improperly sought relief directly from the SBA rather than seeking relief through arbitration. Id. at 9, ¶ 41. The Complaint alleged four causes of action. In Claim I, for breach of the parties 2003 contract (including the arbitration clause), Sport Collector and Lagnier claim that BANA breached the terms of the parties original agreement by failing to arbitrate the dispute. Id. at 11, ¶¶ 57-63. In Claim II, entitled "Breach of Good Faith and Fair Dealing," the Complaint alleges that "under the Uniform Commercial Code (USS) [sic], Bank of America had a fiduciary obligation to conduct its business with the plaintiffs in good faith." Id. at ¶ 66. Claim II further alleges that BANA's failure to comply with the arbitration provision "was a breach of its duty to conduct its business with plaintiffs in good faith." Id. at ¶ 67. In Count III, the Complaint Alleges "abuse of process" by claiming that BANA "brought its complaint on June 11, 2010 for the purpose of using the complaint in a wrongful manner that was not proper in the regular course of proceedings." Id. at 12, ¶ 74. In Count IV, the complaint alleges that BANA "acted willfully in bringing its June 11, 2010 complaint," Id. at 13, ¶ 78, and that by bringing the complaint on June 11, 2010, BANA "caused plaintiff Patrice Lagnier to suffer severe emotional distress." Id. at ¶ 83. II. LEGAL STANDARD To survive a motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678; 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)) (reversing denial of motion to dismiss). “[A] plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (citation omitted). “Threadbare recitals of Case 2:16-cv-02229-ROS Document 11 Filed 08/05/16 Page 6 of 12 7 802928.12\0546448 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B r ya n C a v e L L P T w o N o r t h C e n t r a l A v e n u e , S u it e 2 2 0 0 P h o e n ix , A r iz o n a 8 5 0 0 4 -4 4 0 6 (6 0 2 ) 3 6 4 -7 0 0 0 the elements of a cause of action, supported by mere conclusory statements, do not suffice” and need not be accepted as true. Iqbal, 129 S. Ct. at 1949-50. A plaintiff cannot meet his burden simply by contending that he “might later establish some ‘set of [undisclosed] facts’ to support recovery.” Twombly, 550 U.S. at 561. Rather, “[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 129 S. Ct. at 1949. It is not sufficient if the complaint merely establishes a “sheer possibility” that the defendant has acted unlawfully. “Where a complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief.’” Id. (quoting Twombly, 550 U.S. at 557). Moreover, where there is an “obvious alternative explanation” for the conduct alleged, the complaint should be dismissed for failure to state a claim. Id. at 1951. To determine whether a complaint states a plausible claim for relief, the court must rely on its “judicial experience and common sense.” Id. at 1950. III. ARGUMENT A. Res Judicata Bars Claims I and II Under the doctrine of res judicata or claim preclusion, a final judgment on the merits in a prior action between the parties “bars relitigation of all grounds of recovery that were asserted, or could have been asserted . . . It is immaterial whether the claims asserted subsequent to the judgment were actually pursued in the action that led to the judgment; rather, the relevant inquiry is whether they could have been brought.” Tahoe Sierra Preservation Council Inc. v. Tahoe Regional Planning Agency, 322 F.3d 1064, 1078 (9th Cir. 2003) (internal citation omitted). The doctrine applies “whenever there is (1) an identity of claims, (2) a final judgment on the merits, and (3) privity between parties.” Id. at 1077 (internal quotations and citations omitted). Count I seeks to re-litigate the question of whether the underlying contract required BANA to arbitrate. Count II raises the same issue under a different legal theory. Case 2:16-cv-02229-ROS Document 11 Filed 08/05/16 Page 7 of 12 8 802928.12\0546448 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B r ya n C a v e L L P T w o N o r t h C e n t r a l A v e n u e , S u it e 2 2 0 0 P h o e n ix , A r iz o n a 8 5 0 0 4 -4 4 0 6 (6 0 2 ) 3 6 4 -7 0 0 0 The trial court in the Previous Action ruled that BANA did not have to arbitrate if it preferred to seek relief under the guaranty. The trial court also ruled, directly, that BANA had the right to seek relief under the guaranty. Those issues were front and center and ripe for appeal. The parties were the same, the issues were the same, and the trial court in the Previous Action entered final judgment. When Sport Collectors and Lagnier abandoned their appeal, they forever abandoned any further right to address those issues. They cannot just keep litigating issues in case after case. B. The Doctrine Of Collateral Estoppel Also Bars Counts I and II The doctrine of collateral estoppel, or issue preclusion, “prevents relitigation of all ‘issues of fact or law that were actually litigated and necessarily decided’ in a prior proceeding.” Robi v. Five Platters, Inc., 838 F.2d 318, 322 (9th Cir. 1988) (internal citations omitted). Whether used offensively or defensively, “the party against whom estoppel [issue preclusion] is asserted has litigated and lost in an earlier action.” Id. (internal quotations and citations omitted). Four requirements must be met to preclude an issue from relitigation: “(1) there was a full and fair opportunity to litigate the issue in the previous action; (2) the issue was actually litigated; (3) there was final judgment on the merits; and (4) the person against whom collateral estoppel is asserted was a party to or in privity with a party in the previous action.” Wolfson v. Brammer, 616 F.3d 1045, 1064 (9th Cir. 2010) (internal citation omitted). In this case, all four requirements are met with regard to Counts I and II. First, Plaintiffs had a full and fair opportunity to litigate in the Previous Action. As the February 4, 2015 Ruling reflects, the Superior Court considered but rejected Plaintiffs’ argument that BANA was required to arbitrate its claims against Plaintiffs, and that BANA was prohibited from satisfying Plaintiffs’ debt obligation through the SBA. Second, the same factual and legal issues found in the Plaintiffs’ present Complaint were actually litigated in the Previous Action, which the Superior Court dismissed. Third, the Superior Court’s dismissal of the Previous Action and Plaintiffs’ subsequent abandonment of their appeal was a final judgment on the merits. Finally, Plaintiffs and BANA are the same parties as were named in the Previous Action. Because all four Case 2:16-cv-02229-ROS Document 11 Filed 08/05/16 Page 8 of 12 9 802928.12\0546448 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B r ya n C a v e L L P T w o N o r t h C e n t r a l A v e n u e , S u it e 2 2 0 0 P h o e n ix , A r iz o n a 8 5 0 0 4 -4 4 0 6 (6 0 2 ) 3 6 4 -7 0 0 0 requirements are met, the doctrine of issue preclusion additionally bars Plaintiffs’ Complaint and this Court should dismiss it and this action with prejudice. 2 C. The Statute of Limitations Bars Counts III and IV Counts III and IV seek tort relief arising from BANA's filing of a complaint in 2010. A two year statute of limitations applies. A.R.S. §12-542. Sport Collectors and Lagnier knew that BANA sued them in 2010, and believed, as set out in the pleadings set forth in the Previous Action, that BANA had violated an arbitration provision. They also would have had to know as of the time that BANA filed the action that the lawsuit had caused Lagnier whatever emotional distress he claims he suffered. So their claims in that regard expired within two years after BANA filed that complaint, in 2012. Even if Sport Collectors and Lagnier were to argue that their claims in this regard did not accrue until the Court of Appeals issued its decision in January 2014, their statute would have tolled in January 2016. But they did not file this action until June 2016 - well outside the statute of limitations. D. Count III and IV Cannot Succeed as a Matter of Law Because the Trial Court in the Previous Action Ruled that BANA's Conduct in Seeking Relief from the SBA was Lawful During the parties’ pre-motion meet and confer efforts, BANA raised the statute of limitations issue with opposing counsel. Opposing counsel respectfully disagreed with BANA's analysis in that regard, and suggested that Sport Collectors and Lagnier did not know that BANA had sought relief from the SBA until August 2014, so that their claims did not accrue until that time. There are two problems with that response. First, as phrased, the Complaint contends that the actions accrued upon the filing of the Previous Action. Second, even if Sport Collectors and Lagnier were to amend the Complaint to allege that these causes of action accrued in August 2014, when they claim to have learned of BANA's efforts 2 Plaintiffs also improperly allege that the Uniform Commercial Code imposes fiduciary obligations on commercial parties in their contractual relationships. Every contract, however, does include a covenant of good faith and fair dealing. Rawlings v Apodaca, 151 Ariz. 149, 153, 726 P.2d 565, 569 (1986). Case 2:16-cv-02229-ROS Document 11 Filed 08/05/16 Page 9 of 12 10 802928.12\0546448 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B r ya n C a v e L L P T w o N o r t h C e n t r a l A v e n u e , S u it e 2 2 0 0 P h o e n ix , A r iz o n a 8 5 0 0 4 -4 4 0 6 (6 0 2 ) 3 6 4 -7 0 0 0 regarding the SBA, that change would not address the fact that the trial Court in the Previous Action determined that BANA's conduct in that regard was lawful. So if the conduct that Sport Collectors and Lagnier claim to have learned about in August 2014 was lawful, then it cannot form the basis of a tort cause of action. Lawful conduct cannot possibly be so "outrageous" as to meet the element in an Intentional Infliction of Emotional Distress claim that requires a plaintiff to allege and ultimately prove that a defendant's conduct was so extreme and outrageous so as to demonstrate that the defendant acted with the intent to cause emotional distress or the near certainty that such distress would result. E.g. Watkins v. Arpaio, 239 Ariz. 168, 171-172, 367 P.3d 72, 74- 75, (App. 2016) (setting out elements of emotional distress). If Sport Collectors wished to preserve their claim that BANA's decision to seek relief directly from the SBA caused Lagnier emotional distress, then they would have had to pursue and won their appeal on that issue. As the record now stands, however, the trial court's rulings in the Previous Action control, and so no tort cause of action can accrue at any time within or outside of the statute of limitations. IV. REQUEST FOR ATTORNEYS’ FEES. BANA seeks recovery of its fees and legal expenses incurred in connection with defending this action pursuant to A.R.S. § 12-341.01 (action arising from a contract) and § 12-349. Sport Collectors and Lagnier have pursued this action without substantial justification; the facts are clear, the law is clear, and there is no viable claim here. BANA would file an appropriate motion for fees upon an order dismissing this action. It also seeks all available costs. CONCLUSION For these reasons, BANA seeks an order dismissing this action, with prejudice. It also seeks an order granting it permission to file an application for attorneys' fees and costs. Case 2:16-cv-02229-ROS Document 11 Filed 08/05/16 Page 10 of 12 11 802928.12\0546448 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B r ya n C a v e L L P T w o N o r t h C e n t r a l A v e n u e , S u it e 2 2 0 0 P h o e n ix , A r iz o n a 8 5 0 0 4 -4 4 0 6 (6 0 2 ) 3 6 4 -7 0 0 0 DATED this 5th day of August, 2016. BRYAN CAVE LLP By: s/Teresa P. Meece Robert W. Shely Jacob A. Maskovich Teresa P. Meece Two North Central Avenue, Suite 2200 Phoenix, Arizona 85004-4406 Attorneys for Bank of America, N.A. Case 2:16-cv-02229-ROS Document 11 Filed 08/05/16 Page 11 of 12 12 802928.12\0546448 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B r ya n C a v e L L P T w o N o r t h C e n t r a l A v e n u e , S u it e 2 2 0 0 P h o e n ix , A r iz o n a 8 5 0 0 4 -4 4 0 6 (6 0 2 ) 3 6 4 -7 0 0 0 CERTIFICATE OF SERVICE I hereby certify that on August 5th, 2016, I electronically transmitted the attached document to the Clerk’s Office using CM/ECF System for filing and mailed a copy to: Maria B. Wolfinger 5408 W. Grove Street Laveen, Arizona 85339 Attorney for Plaintiffs s/ Donna McGinnis Case 2:16-cv-02229-ROS Document 11 Filed 08/05/16 Page 12 of 12 Exhibit 1 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 1 of 120 'Bank of America, N.A. v. Sport Collectors Guild, Inc., Not Reported in P.3d (2014) 2014~WL1~73516-----~-~~~- ~--~~~~-~~~-- 2014 WL 173516 Only the Westlaw citation is currently available. NOTICE: NOT FOR PUBLICATION. UNDER ARIZ. R. SUP. CT. llleC), THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED. Court of Appeals of Arizona, Division 1. BANK OF AMERICA, N.A., an Arizona limited liability company, Plaintiff/Appellee, v. SPORT COLLECTORS GUILD, INC., an Arizona corporation, Defendant/Appellant. NO.1 CA-CV 12-0804. I Jan. 16, 2014. Appeal from the Superior Court in Maricopa County; No. CV201O-014385; The Honorable Mark H. Brain, Judge. VACATED AND REMANDED. Attorneys and Law Firms Bettwy& Wolfinger By Maria B. Wolfinger, Phoenix, Counsel for Defendant/Appellant. Poli & Ball, P.L.e. By Michael N. Poli and Kesha A. Hodge, Phoenix, Counsel for Plaintiff/Appellee. Judge MICHAEL J. BROWN delivered the decision of the Court, in which Presiding Judge ANDREW W. GOULD and Judge DONN KESSLER joined. MEMORANDUM DECISION BROWN, Judge. *1 ~ 1 Sport Collectors Guild, Inc. ("Sport") appeals the trial court's order granting summary judgment in favor of Bank of America, N.A. ("Bank"). 1 Because Sport has not repudiated its right to arbitrate, we vacate the court's order and remand for further proceedings. 1 Although Patrice Lagnier is listed on the notice of appeal, he is not represented on appeal and has not submitted briefing. Additionally, in light of Lagnier's discharge under the bankruptcy code, Bank requests that we affirm the judgment only as to Sport. We therefore amend the caption to reflect that Sport is the only party appealing the trial court's judgment. BACKGROUND ~ 2 Sport received a $150,000 line of credit from Bank in 2003. In addition to executing a promissory note, Sport and Bank entered into a Commercial Security Agreement granting Bank a security interest in Sport's assets to secure payment. As further assurance, Patrice Lagnier executed a Commercial Guaranty. The promissory note stated that "[a]t the request of any party to this agreement, any Claim shall be resolved by binding arbitration in accordance with the Federal Arbitration Act, (Title 9, U.S.Code) (the "Act")." ~ 3 The parties extended the line of credit by amendment in 2006. The amendment reiterated the applicability of the Act, and stated that the American Arbitration Association rules and procedures for financial services disputes would apply. It further provided that the arbitration provision concerns the resolution of any controversies or claims between the parties, whether arising in contract, tort or by statute, including but not limited to controversies or claims that arise out of or relate to: (i) this agreement (including any renewals, extensions or modifications); or (ii) any document related to this agreement[.] The dispute resolution provision was a "material inducement for the parties entering into this agreement. " ~ 4 In March 2009, Bank demanded payment of Sport's outstanding balance of $146,798.6l. After a flurry of correspondence, Sport wrote to Bank's counsel in October 2009, stating that if Bank intended to move forward with its demand for payment, then Bank should adhere to the arbitration provision set forth in the promissory note. ~ 5 Bank subsequently informed Sport, in a March 1, 2010 letter, that it was willing to consider restructuring the Loan, but that Sport would have to provide updated financial information. Sport supplied this information on March 31, 2010. In an accompanying letter to Bank's counsel of the same date, Sport again noted that the parties' loan contract included a binding arbitration provision. WE:;rtAW © 2016 Thomson Reuters. No claim to original U,S, Government Works. Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 2 of 120 Bank of America, N.A. v. Sport Collectors Guild, Inc., Not Reported in P.3d (2014) 2cH,fwCT73516--- -- ~ 6 Bank filed suit against Sport and Lagnier ("Defendants," except as otherwise noted) for breach of contract/guaranty and replevin on June 11, 2010. In their answer, signed only by Lagnier in both his individual capacity and as a representative of the company, Defendants did not mention arbitration. Sport petitioned for a Chapter 11 bankruptcy on July 1, 2010, but the bankruptcy court dismissed the case without a discharge on August 3, 2010. Lagnier petitioned for Chapter 7 bankruptcy on July 2, 2012 and was granted a discharge on October 16,2012. ~ 7 None of the parties conducted discovery or exchanged Rule 26.1 disclosure statements. In February 2011, Bank moved for summary judgment. In response, through counsel, Defendants alleged Bank materially breached the loan agreement by failing to pursue arbitration. Alternatively, Defendants argued that Bank was equitably estopped by prior representations, and the commercial frustration doctrine discharged Defendants' obligation to perform. On the same date, Defendants filed an amended answer, raising the binding arbitration provision as an affirmative defense and alleging that Bank's failure to abide by the provision constituted a breach. *2 ~ 8 Bank replied that Defendants had waived and repudiated the right to the arbitration term by failing to raise it in the answer, and then failing to invoke it for several months thereafter. The trial court agreed, characterizing the arbitration request as the "only issue" of "any potential merit," but finding Sport's invocation of the arbitration clause untimely. The court therefore granted summary judgment. It then filed a signed judgment, without Rule 54(b) language, holding Defendants jointly and severally liable for breach of contract. Defendants moved for a new trial. Before the trial court denied that motion, Defendants filed a notice of appeal. This court dismissed the appeal, citing the judgment's failure to resolve the replevin claim and lack of Rule 54(b) language. On remand, Bank agreed to the dismissal of its replevin claim, and the trial court issued a signed order. Defendants timely filed a notice of appeal. DISCUSSION ~ 9 A party may lose the right to arbitrate by failing to timely assert it. Forest City Dillon, Inc. v.Super. WEsrtAw © 2016 Thomson Reuters. No claim to original U.S. Govemment Works. 2 Ct. (Carruth ), 138 Ariz. 410, 412, 675 P.2d 297, 299 (App.1984); see generally Cox. v. Ocean View Hotel Corp., 533 F.3d 1114, 1121 (9th Cir.2008) (applying state law and determining whether repudiation had occurred in a case governed by the FAA). The untimely assertion of the right to arbitration raises three potential scenarios: (1) a repudiation/waiver; (2) the failure of a procedural condition; or (3) the failure of a condition precedent to activating the clause. City of Cottonwood v. James L. Fann Contracting, Inc., 179 Ariz. 185, 189, 877 P.2d 284, 288 (App.1994).2 2 A condition precedent must be performed before the contract becomes effective. Fann, 179 Ariz. at 189 n. 4, 877 P.2d at 288 n. 4. The condition must expressly and clearly appear in the contract. Id. Bank has not argued that a condition precedent exists here. ~ 10 The parties focus upon whether Sport has repudiated the right to arbitrate. "Because repudiation calls into question the existence of the arbitration agreement, repudiation is an issue for the court." Id. at 190, 877 P.2d at 289; see Bolo Corp. v. Homes & Son Constr. Co., 105 Ariz. 343,345-46,464 P.2d 788, 790-91 (1970). We review this issue de novo. In re Estate of Cortez, 226 Ariz. 207, 210, ~ 3,245 P.3d 892,895 (App.201O). ~ 11 Repudiation occurs when a party engages in "conduct preventing arbitration, proceeds at all times in disregard of arbitration, expressly agrees to waive arbitration, or unreasonably delays requesting arbitration." In re Noel R. Shahan Irrevocable & Inter Vivos Trust, 188 Ariz. 74, 77-78, 932 P.2d 1345, 1348-49 (App.1996). A claim of repudiation based upon unreasonable delay must be supported by "clear evidence of 1) prejudice suffered by the other party and 2) a demand for arbitration so egregiously untimely and inconsistent with an intent to assert the right to arbitrate that an intentional relinquishment can be inferred." Fann, 179 Ariz. at 192, 877 P.2d at 291. Thus, Bank bears a "heavy" burden in establishing that Sport repudiated its right to arbitration. Id. at 192 n. 10, 877 P.2d at 291 n. 10 (citing Rancho Pescado, Inc. v. Nil'. lvIut. Life Ins. Co., 140 Ariz. 174, 181, 680 P.2d 1235, 1242 (App.1984)). *3 ~ 12 Bank contends that Sport waived its right to arbitrate by filing its answer without raising arbitration as an affirmative defense. We disagree. Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 3 of 120 Bank of America, N.A. v. Sport Collectors Guild, Inc., Not Reported in P.3d (2014) 2014 we173516---- ---------~-,---- -~,~---,~---,-,---~---,--~----.- ~ 13 The answer Defendants submitted on July 6, 2010 was signed only by Lagnier. He purported to sign it on behalf of Sport, but was not authorized to do so. See Ramada Inns, Inc. v. Lane & Bird Advertising, Inc., 102 Ariz. 127, 128,426 P.2d 395, 396 (1967) (explaining that, absent statutory authority, a company "cannot practice law even in its own behalf' and "cannot appear in court by an officer who is not an attorney"). Thus, the answer was invalid as to Sport. ~ 14 Because Sport did not file an answer to the complaint at the time Lagnier submitted his answer, the first time Sport made an appearance in the litigation was on March 23,2011, when its attorney filed her notice of appearance. Sport then filed its response to the summary judgment motion and its "amended" answer, both of which raised the arbitration issue. Moreover, as reflected in the record before us, at the time Lagnier filed his answer, the automatic bankruptcy stay was in effect and the litigation was therefore on hold. See 11 U.S.c. section 362(a) (stating an automatic stay goes into effect at the time a debtor files a bankruptcy petition). ~ 15 Given these circumstances, we conclude that the trial court erred in granting summary judgment on the basis that the arbitration issue was not timely raised. There was End of Document no unreasonable delay and no conduct inconsistent with the intent to arbitrate. Fann, 179 Ariz. at 191-92, 877 P.2d at 291-92. Therefore, Bank has not met its burden of proving waiver through repudiation. ~ 16 Both parties have requested attorneys' fees on appeal. Bank has not prevailed and therefore we deny its request. Sport has failed to cite any authority and we likewise deny its request. See ARCAP 21(a)(2) (requiring a party requesting attorneys' fees to "specifically state the statute, rule, decisional law, contract, or other provision authorizing an award of attorneys' fees"). Sport is entitled, however, to an award of costs incurred on appeal subject to compliance with Arizona Rule of Civil Appellate Procedure 21(a). CONCLUSION ~ 17 Based on the foregoing, we vacate the trial court's judgment entered on September 12, 2011, and remand for further proceedings consistent with this decision. All Citations Not Reported in P.3d, 2014 WL 173516 © 2016 Thomson Reuters. No claim to original U.S. Government Works. --~----~-------- . --.---- W'i5.$f1..J'"W © 2016 Thomson Reuters. No claim to original U.S. Government Works. 3 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 4 of 120 Exhibit 2 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 5 of 120 Michael K. Jeanes, Clerk of Court *** Electronically Filed *** 03120/20148:00 AM SUPERIOR COURT OF ARIZONA MARICOPA COUNTY CV 2010-014385 03119/2014 HONORABLE MARK H. BRAIN CLERK OF THE COURT A. Melchert Deputy BANK OF AMERICA N A KESHA A HODGE v. SPORT COLLECTORS GUILD INC, et al. MARIA B WOLFINGER INACTIVEIDISMISSAL CALENDAR The Court has received a Mandate from the Court of Appeals, as well as Defendants' Request for Status Conference (filed March 10,2014). There is no need for a status conference-the Court of Appeals has directed this Court to enforce the arbitration agreement. Accordingly, IT IS ORDERED that the parties proceed to arbitration on the claims set forth in the Complaint.' IT IS FURTHER ORDERED staying this matter and placing it on the inactive calendar for dismissal without further notice after December 31, 2014 unless (a) a party has submitted an arbitration award to the Court for confirmation prior to that date or (b) the Court has extended this deadline .. Effective April 15, 2014 new civil rules and forms are in effect for managing Cases moving to trial. Be sure to review the new Civil Rules 16,26,37,38, 72 through 74 and 77. I Defendants' request suggests that they have an "anticipated counterclaim" against a non -party, but they have not moved to amend their pleadings. Docket Code 078 Form VOOOA Page 1 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 6 of 120 Exhibit 3 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 7 of 120 1 2 3 "5 6 7 8 9 10 11 12 13 1" 15 16 17 18 19 20 21 22 23 2" 25 26 27 28 Maria B. Wolfmger Arizona State Bar No. 011362 37 W. McLellan Blvd. Phoenix, AZ 85013 602-432-4338/602-274-6500 (fax) elian5@cox.net Attorney for Defendants Michael K Jeanes, Clerk of Court *** Electronically Filed *** .S. Bagnall, Deputy 11/13/201411 :34:00 AM Filing ill 6231265 IN THE SUPERIOR COURT OF ARIZONA MARICOPA COUNTY Pursuant to A.R.S. § 12-864, defendants Sport Collectors Guild and Patrice Lagnier, through counsel undersigned, request that this Court require plaintiff Bank of America to appear and show cause, if any, why this Court should not enter an order finding it in contempt of this Court's March 19, 2014 Order and impose sanctions for such contempt. Undersigned counsel's affidavit in support of this motion is attachedat Exhibit "8". In May 2003, Sport Collectors Guild received a $150,000 line of credit from Bank of America. In addition to executing a promissory note, Sport Collectors Guild and Bank of America entered into a Commercial Security Agreement granting Bank of America a security interest in Sport Collectors Guild's assets to secure payment. As further assurance, Patrice Lagnier executed a Commercial Guaranty. The promissory BANK OF AMERICA. N.A., an Arizona) limited liability Company, ) ) Plaintiff, ) ) v. ) ) SPORT COLLECTORS GUILD, INC., ) and PATRICE LAGNIER, ) ) Defendants. ) ) ) 1. RELEVANT FACTS. No. CV2010-014385 DEFENDANTS' MOTION FOR ORDER TO SHOW CAUSE RE CONTEMPT AND SANCTIONS PURSUANT TO A.R.S. § 12-864 (Assigned to Honorable Mark H. Brain) 1. Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 8 of 120 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 note stated that at the request of any party to this agreement, any Claim shall be resolved by binding arbitration in accordance with the Federal Arbitration Act, (Title 9, U.S. Code). In January 2009, two weeks after Bank of America received $20 billion from the federal government through the Troubled Asset Relief Program, Bank of America sent a letter to Sport Collectors Guild stating its interest in helping the long-established company with its financial needs. Sport Collectors Guild responded to the letter, requesting a modification of its 2003 loan. In March 2009, in response to Sport Collectors Guild's request for a modification of the 2003 loan, Bank of America demanded payment of the loan's balance in the amount of $146,798.61. In October 2009 and again in March 2010, Sport Collectors Guild demanded that Bank of America abide by the arbitration provision set forth in their 2003 agreement and resolve the matter in arbitration. Bank of America did not proceed to arbitration and, instead, filed a Complaint in this Court in June 2010 against Sport Collectors Guild and Patrice Lagnier for breach of contract/guaranty and replevin ("Complaint"). In February 2011, Sport Collectors Guild and Patrice Lagnier filed an amended answer, raising the arbitration provision in the 2003 agreement as an affirmative defense and alleging that Bank of America's failure to abide by the arbitration provision constituted a breach. Bank of America claimed that Defendants had waived and repudiated the right to the arbitration. This Court agreed and, on September 12, 2011, granted summary judgment in favor of Bank of America on the promissory note and guaranty in the amount of $201,640.80. Exhibit' I". Bank of America recorded this Court's judgment on September 15, 2011, March 16, 2012, and again on March 20, 2012. Exhibit '2", Exhibit "3" and Exhibit "4". The judgments fatally compromised the good credit of Sport Collectors Guild and Patrice Lagnier, and forced Patrice Lagnier into personal bankruptcy in October 2012. On January 16, 2014, the Arizona Court of Appeals vacated this Court's September 12~2011 judgment in the amount of $201,640.80 and directed this Court to enforce the parties' arbitration agreement. Exhibit "5". 2 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 9 of 120 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 l' 20 21 22 23 24 25 26 27 28 On February 26, 2014, Bank of America submitted a guaranty request with the U.S. Small Business Association ("SBA") with respect to the parties' 2003 loan agreement. Exhibit "6". On information and belief, the SBA has recommended approval of Bank of America's guaranty request. Pursuant to federal regulations, Sport Collectors Guild and its guarantor, Patrice Lagnier, are required to reimburse the federal government for all monies paid to Bank of America in response to its guaranty request. Exhibit "8" at paragraph 12. On March 19, 2014, this Court ordered that the parties proceed to arbitration on the claims set forth in Bank of America's Complaint. Exhibit "7. On information and belief, Bank of America is not proceeding to arbitration as this Court so ordered on March 19, 2014. II. DISCUSSION. Pursuant to A.R.S. § 12-864, "Contempts committed: .. by failure to obey a lawful . .. order of the court ... may be punished in conformity to the practice and usage of the common law." "[A]s a general proposition, sanctions for failure to obey a trial court's orders should be limited to achieve their desired result." Green v. Lisa Frank, 221 Ariz. 138, 162, 211 P.3d 16, 40 (Ariz. App. 2009). Commenting that it had "considered an array of sanctions, including the imposition of attorney fees and even incarceration," the court.in Green concluded such sanctions "do not address the damage ...that has occurred and continues to occur as a result of Green's contempt for the judicial process, court orders and this Court." (Emphasis added.) Green, 211 P. 3d 16, ~ 8. Instead of proceeding to arbitration on the claims set forth in its Complaint, as this Court ordered on March 19, 2014, Bank of America has chosen to resolve the claims in its Complaint by submitting a guaranty request with the SBA. Bank of America submitted its guaranty request with full knowledge that the Arizona Court of Appeals had vacated the 2011 $201,640.80 judgment entered against Sport Collectors Guild and Patrice Lagnier in September 2011 and ruled that Sport Collectors Guild and Patrice Lagnier were entitled to have the claims set forth in Bank of America's Complaint heard in accordance with the Federal Arbitration Act. Bank of America pursued the guaranty 3 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 10 of 120 t 2 3 4 5 6 7 8 9 to tt t2 t3 .14 t5 t6 t7 t8 tg 20 2t 22 23 24 25 26 27 28 request knowing that doing so would find Sport Collectors Guild and Patrice Lagnier liable to the federal government for monies paid to Bank of America with respect to the matters set forth in the parties' 2003 agreement. Bank of America's act of filing a Complaint in this Court in June 2010 resulted in a $201,640.80 judgment that caused Sport Collectors Guild, a well-respected American company, Exhibit "8", to close its doors. Without a source of income on account of the closure of his business and unable to obtain credit because of the $201,640.80 judgment, Patrice Lagnier suffered loss of wages, loss of reputation, and loss of enjoyment of life, and was forced to file personal bankruptcy in October 2012. The Court of Appeals' January 2014 ruling vacating the $201,640.80 judgment offers little solace to Sport Collectors Guild and Patrice Lagnier who have suffered deeply because of Bank of America's refusal to abide by the arbitration provision they wrote into the parties' 2003 agreement, and now its refusal to obey this Court's March 19,2014 Order. III. CONCLUSION. As a direct and proximate result of Bank of America's failure to obey this Court's March 19, 2014 Order and, instead, pursue a guaranty request with the SBA, Sport Collectors Guild and Patrice Lagnier request an order from this Court imposing sanctions that address the damage that has occurred and continues to occur as a result of Bank of America' contempt for the judicial process, court orders and this Court, namely: (1) Damages in an amount sufficient to reasonably compensate for the injuries that Sport Collectors Guild and Patrice Lagnier have and will. sustain, including special and general damages; (2) Punitive damages in such an amount as is reasonably calculated to appropriately and adequately deter Bank of America and others in a similar position and similar circumstances from engaging in conduct that evidences a conscious disregard of the integrity of this Court, the judicial system and compliance with court orders. (3) Reasonable costs and attorneys' fees. (4) All other relief that this Court may deem just and appropriate under the 4 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 11 of 120 1 circumstances. 2 Respectfully submitted this 13th day of November, 2014. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 /s/ Maria B. Wolfinger Maria B. Wolfinger Original electronically filed November 13,2014, with the Clerk of the Court. Copy mailed via first-class mail to: Honorable Mark H. Brain 101 W. Jefferson East Court Building - 413 Phoenix, AZ 85003 Kesha A. Hodge Poli & Ball 2999 N. 44thStreet, Suite 500 Phoenix, AZ 85018 /s/ Maria B.Wolfmger Maria B. Wolfinger 5 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 12 of 120 Exhibit "1" Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 13 of 120 20110768978 ~ .-- .;-- *** Grante *** See eSignatu e Page 2 3 4 5 6 7 8 9 00 10LOill Cco ::J" 11.wgo <0 14::J'<:I"z'" 11 • CJ) go -co..Jf-«o 12n.:lliz~ -0::0'-...Jf-N'..- 11 • Ul ~ <.) -eo -!tu- 160> 0> N 17 18 19 20 21 22 23 24 25 26 ARIZONA SUPERIOR COURT MARICOPA "COUNTY BANK OF AMERICA, N.A., a national banking association, vs. (Assigned to the Hon. Mark Brain) No. CV2010-014385 Plaintiff, JUDGMENT SPORT COLLECTORS GUILD, INC., an Arizona corporation; PATRICE LAGNIER, an individual, Unofficial Document Defendants. " The Court having reviewed the Motion for Summary Judgment filed by Plaintiff Bank of America, N.A., the response filed by Defendants Sport Collectors Guild, Inc. and Patrice Lagnier, the reply from Plaintiff, and good cause appearing: THIS COURT FINDS that Plaintiff Bank of America, N.A. is entitled to summary judgment in its favor on the note and guaranty .. IT IS HEREBY ORDERED, ADJUDGED AND DECREED that Plaintiff "Bank of America, N.A., has judgment against Defendants Sports Collectors Guild, Inc. and Patrice Lagnier, jointly and severally, as follows: 1. Awarding Plaintiff $146,798.61, representing the outstanding principal "balance of the Note. Case 2:16-cv-02229-ROS Document 11- Filed 08/05/16 Page 26 of 120 2 3 4 5 6 7 8 0 9 0 10 W 10cco :;)'""" t.:iCf)_~ 11 --!tli«o o..wz~ 12-0:: 0 -e- .....II-No:;tron;:':::> .... 'I1. (/) fiSo -00-njj « 0 12o.wz~ JO::o ...... .Jf-N·c, 13«(f.)ii::""roI«O:> rX:S f- - N:J~~g 14o~m.~ o.tl::0 15OIzo. 0> 16OJ 0> N 17 18 19 20 21 22 23 24 25 26 ARIZONA SUPERIOR COURT MARICOPA COUNTY BANK. OF AMERICA, N.A., a national banking association, vs. (Assigned to the Hon. Mark Brain) No. CV2010-014385 Plaintiff, . JUDGMENT SPORT COLLECTORS GUILD, INC. an Arizona corporation; PATRICE LAGNIER, an individual, . Unofficial Document Defendants .. The Court having reviewed the Motion for Summary Judgment filed by Plaintiff Bank of America) N.A., the response filed by Defendants Sport Collectors Guild, Inc. and Patrice Lagnier, the reply from Plaintiff, and good cause appearing: THIS COURT FINDS that Plaintiff Bank of America, N.A. is entitled to summary judgment in its favor on the note and guaranty. IT IS HEREBY ORDERED, ADJUDGED AND DECREE» that Plaintiff Bank of America, N.A., has judgment against Defendants Sports Collectors Guild, Inc. and Patrice Lagnier, jointly and severally, as follows: 1. Awarding Plaintiff $146,798.61, representing the outstanding principal . balance of the Note. Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 34 of 120 2 3 4 5 6 7 8 0 9 0 l() ~oo 10 ::>..- 0(f).~ 11 -!tuI:5;Xt'J:J -CDo~m~ 14 0..0::0oJ:zo.. 15 0> 0> 0> 16N 17 18 19 20 21 22 23 24 25 26 20120229434 2. Awarding outstanding interest in the amount of $40,423.76 through February 18,2011, and fees and late charges in the amount of $7,381.43. 3. Awarding interest on the principal amount and accrued interest and outstanding interest owed under the Note at the contractual interest rate (or $55.30 per day), from February 18, 2011 until paid in full. 4. Awarding Plaintiff attorneys' fees in the amount of $6,625.20. 5. Awarding Plaintiff taxable costs in the amount of$411.80; and 6. Awarding Plaintiff interest on the attorneys' fees and taxable costs at the legal rate of 4.25% per annum from the date of this judgment until paid in full. Dated: September 12, 2011. Unofficial Document THE HONORABLE MARK BRAIN MARICOPA COUNTY SUPERIOR COURT 2 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 35 of 120 20120229434 eSlgnature Page -- 201109121151383 Bank of America v Sport C . Collectors_Guild. pdf - - - - - Granted Signed on this day, Septem·ber 12, 2011 /S/ Mark Brain Judicial Officer of Superior Court Unofficial Document . , -,.'.;. '\.~'.'.~'". .: .::.;... ,', . ',' Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 36 of 120 20120229434 Patrice Lagnier 7310 W. Roosevelt Street, #32 Phoenix, Arizona 85043 MONEY JUDGMENT INFORMATION STATEMENT 1. Name and last known address of each judgment debtor and the address at which each judgment debtor received the summons by personal service or by maiL Sport Collectors Guild, Inc. clo Patrice Lagnier, Statutory Agent 7310 West Roosevelt Street, #32 Phoenix, Arizona 85043 $201,640.80, plus accrued and accruing interest. 2. The name and address of the judgment creditor. Bank of America, N .A. Attn: Dawn Kennedy M08-050-01-17 2001 N.E. 46th Street Unofficial Documenl Kansas City, Missouri 64116-2051 3. The amount of the judgment or decree as entered or as most recently renewed. 4. If the judgment debtor is a natural person, the judgment debtor's social security number, date of birth and driver license number. (SSN to be given only if provided voluntarily by judgment debtor.) . Unknown 5. Whether a stay or enforcement has been ordered by the court and the date the stay expires. None known Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 37 of 120 Exhibit" 5" Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 38 of 120 IN THE ~ourt of ~ppeaLS' STATE OF ARIZONA DIVISION ONE ) ) ) ) Plaintiff/Appellee, ) ) ) ) ) ) ) ) ) ---------------------------------) BANK OF AMERICA, N.A., an Arizona limited liability company, v. SPORT COLLECTORS GUILD, INC., an Arizona corporation; PATRICE LAGNIER, an individual, Defendants/Appellants. MANDATE Court of Appeals Division One No. 1 CA-CV 12-0804 Maricopa County Superior Court No. CV2010-014385 TO: The Maricopa County Superior Court and the Honorable Mark H Brain, Judge, in relation to Cause No. CV2010-014385. This cause was brought before Division One of the Arizona Court of Appeals in the manner prescribed by law. This Court rendered its MEMORANDUM DECISION and it was filed on January 16, 2014. The time for the filing of a motion for reconsideration has expired and no motion was filed. The time for the filing of a petition for review has expired and no such petition was filed. NOW, THEREFORE, YOU ARE COMMANDED to conduct such proceedings as required to comply with the MEMORANDUM DECISION of this court; a copy of which is attached hereto. I, Ruth A. Willingham, Clerk of the Court of Appeals, Division One, hereby certify the attachment to be a full and accurate copy of the MEMORANDUM DECISION filed in this cause on January 16, 2014. IN WITNESS WHEREOF, I hereunto set my hand and affix the official seal of the Arizona Court of Appeals, Division One, on February 24r 2014. (SEAL) RUTH WILLINGHAM, CLERK By ~DeputClerk .-----------~--.-- ------- Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 39 of 120 NOTICE: NOT FOR PUBLICATION. UNDER ARIZ. R. SUP. CT. l11(c), 1HiS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AU1HORIZED. IN THE ARIZONA COURT OF APPEALS DIVISION ONE . BANK OF AMERICA, N.A., an Arizona limited liability company, Plaintiff/Appellee, v. SPORT COLLECTORS GUILD, INC., an Arizona corporation, Defendant/Appellant. No.1 CA-CV 12-0804 FILED 1-16-2014 . Appeal from the Superior Court in Maricopa County No. CV2010-014385 The Honorable Mark H. Brain, Judge VACATED AND REMANDED COUNSEL Bettwy &Wolfinger, Phoenix By Maria B. Wolfinger Counsel for Defendant/Appellant Poli & Ball, P.L.c., Phoenix By Michael N. Poll and Kesha A. Hodge Counsel for Plaintiff/Appelle~ Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 40 of 120 BANK OF AMERICA v. SPORT COLLECTORSGUILD Decision of the Court MEMORANDUM DECISION Judge Michael J. Brown. delivered the decision of the Court, in which Presiding Judge Andrew W. Gould and Judge Donn Kessler joined. B ROW N, Judge: ~1 Sport Collectors Guild, Inc. ("Sport") appeals the trial court's order granting summary judgment in favor of Bank of America, N.A. ("Bank"). 1 Because Sport has not repudiated its right to arbitrate, we vacate the court's order and remand for further proceedings. BACKGROUND ~2 Sport received a $150,000 line of credit from Bank in 2003. In addition to executing a promissory note, Sport and Bank entered into a Commercial Security Agreement granting Bank a security interest in Sport's assets to secure payment. As further assurance, Patrice Lagnier executed a Commercial Guaranty. The promissory note stated that "[alt the request of any party to this agreement, any Claim shall be resolved by binding arbitration in accordance with the Federal Arbitration Act, (Title 9, U'S, Code) (the IIAct")." ~3 The parties extended the line of credit by amendment in 2006. The amendment reiterated the applicability of the Act, and stated that the American Arbitration Association rules and procedures for financial services disputes would apply. It further provided that the arbitration provision concerns the resolution of any controversies or claims between the parties, whether arising in contract, tort or by statute, including but not limited to controversies or claims that arise out of or relate to: (i) this agreement (including any 1 Although Patrice Lagnier is listed on the notice of appeal, he is not represented on appeal and has not submitted briefing. Additionally, in light of Lagnier's discharge under the bankruptcy code, Bank requests that we affirm the judgment only as to Sport. We therefore amend the caption to reflect that Sport is the only party appealing the trial court's judgment. 2 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 41 of 120 BANK OF AMERICAv. SPORT COLLECTORS GUILD Decision of the Court renewals, extensions or modifications); or (ii) any document related to this agreementr.j The dispute resolution provision was a "material-inducement for the parties entering into this agreement." ~4 In March 2009, Bank demanded payment of Sport's. outstanding balance of $146,798.61. After a flurry of correspondence, Sport wrote to Bank's counsel in October 2009, stating that if Bank intended to move forward with its demand for payment, then Bank should adhere to the arbitration provision set forth in the promissory note. ~5 Bank subsequently informed Sport, in a March I, 2010 letter, that it was willing to consider restructuring the Loan, but that Sport would have to provide updated financial information. Sport supplied this information on March 31, 2010. In an accompanying letter to Bank's counsel of the same date, Sport again noted that the parties' loan contract included a binding arbitration provision. ~6 Bank filed suit against Sport and Lagnier ("Defendants," except as otherwise noted) for breach of contract/ guaranty and replevin on June 11, 2010. In their answer, signed only by Lagnier in both his individual capacity and as a representative of the company, Defendants did not mention arbitration. Sport petitioned for a Chapter 11 bankruptcy on July I, 2010, but the bankruptcy court dismissed the case without a discharge on August 3, 2010. Lagnier petitioned for Chapter 7 bankruptcy on July 2, 2012 and was granted a discharge on October 16, 2012. ~7 None of the parties conducted discovery or exchanged Rule 26.1 disclosure statements. In February 2011, Bank moved for summary judgment. In response, through counsel, Defendants alleged Bank materially breached the loan agreement by failing to pursue arbitration. Alternatively, Defendants argued that Bank was equitably estopped by prior representations, and the commercial frustration doctrine discharged Defendants' obligation to perform. On the same date, Defendants filed an amended answer, raising the binding arbitration provision as an affirmative defense and alleging that Bank's failure to abide by the provision constituted a breach. ~8 Bank replied that Defendants had waived and repudiated the right to the arbitration term by failing to raise it in the answer, and then failing to invoke it for several months thereafter. The trial court agreed, characterizing the arbitration request as the "only issue" of "any 3 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 42 of 120 BANK OF AMERICA v. SPORT COLLECTORS GUILD Decision of the Court potential merit," but finding Sport's invocation of the arbitration clause untimely. The court therefore granted summary judgment. It then filed a signed judgment, without Rule 54(b) language, holding Defendants jointly and severally liable for breach of contract. Defendants moved for a new trial. Before the trial court denied that motion, Defendants filed a notice of appeal. This court dismissed the appeal, citing the judgment's failure to resolve the replevin claim and lack of Rule 54(b) language. On remand, Bank agreed to the dismissal of its replevin claim, and the trial court issued a signed order. Defendants timely filed a notice of appeal. DISCUSSION ~9 A party may lose the right to arbitrate by failing to timely assert it. Forest City Dillon, Inc. v. Super. Ct. (Carruth), 138 Ariz. 410, 412, 675 P.2d 297, 299 (App. 1984); see generally Cox. v. Ocean View Hotel Corp., 533 F.3d 1114, 1121 (9th Cir. 2008) (applying state law and determining whether repudiation had occurred in a case governed by the FAA). The untimely assertion of the right to arbitration raises three potential scenarios: (1) a repudiation/waiver; (2) the failure of a procedural condition; or (3) the failure of a condition precedent to activating the clause. City of Cottonwood v. James L. Fann Contracting, Inc., 179 Ariz. 185, 189,877 P.2d 284, 288 (App. 1994).2 ~10 The parties focus upon whether Sport has repudiated the right to arbitrate. "Because repudiation calls into question the existence of the arbitration agreement repudiation is an issue for the court." Id. at 190, 877 P.2d at 289; see Bolo Corp. v. Homes & Son Constr. Co., 105 Ariz. 343, 345-46, 464 P.2d 788, 790-91 (1970). We review this issue de novo. In re Estate of Cortez, 226 Ariz. 207, 210, ~ 3, 245 P.3d 892, 895 (App. 2010). ~11 Repudiation occurs when a party engages in "conduct preventing arbitration, proceeds at all times in disregard of arbitration, expressly agrees to waive arbitration, or unreasonably delays requesting- arbitration." In re Noel R. Shahan Irrevocable & Inter Vivos Trust, 188 Ariz. 74, 77-78, 932 P.2d 1345, 1348-49 (App. 1996). A claim of repudiation based upon unreasonable delay must be supported by "clear evidence of 1) prejudice suffered by the other party and 2) a demand for arbitration so 2 A condition precedent must be performed before the contract becomes effective. Fann, 179 Ariz. at 189 nA, 877 P.2d at 288 n.4. The condition must expressly and clearly appear in the contract. Id. Bank has not argued that a condition precedent exists here. 4 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 43 of 120 BANK OF AMERICA v. SPORT COLLECTORSGUILD Decision of the Court egregiously untimely and inconsistent with an intent to assert the right to arbitrate that an intentional relinquishment can be inferred." Fann, 179 Ariz. at 192, 877 P.2d at 291. Thus, Bank bears a "heavy" burden in establishing that Sport repudiated its right to arbitration. Id. at 192 n.l0, 877 P.2d at 291 n.l0 (citing Rancho Pescado, Inc. v. Nw. Mut. Life Ins. Co., 140 Ariz. 174,181,680 P.2d 1235, 1242 (App. 1984)). ~12 Bank contends that Sport waived its right to arbitrate by filing its answer without raising arbitration as an affirmative defense. We disagree. ~13 The answer Defendants submitted on July 6, 2010 was signed only by Lagnier. He purported to sign it on behalf of Sport, but was not authorized to do so. See Ramada Inns, Inc. v. Lane & Bird Advertising, Inc., 102 Ariz. 127, 128, 426 P.2d 395, 396 (1967) (explaining that, absent statutory authority, a company "cannot practice law even in its own behalf" and "cannot appear in court by an officer who is not an attorney"). Thus, the answer was invalid as to Sport. ~14 Because Sport did not file an answer to the complaint at the time Lagnier submitted his answer, the first time Sport made an appearance in the litigation was on March 23,2011, when its attorney filed her notice of appearance. Sport then filed its respon$e to the summary judgment motion and its "amended" answer, both of which raised the arbitration issue. Moreover, as reflected in the record before us, at the time Lagnier filed his answer, the automatic bankruptcy stay was in effect and the litigation was therefore on hold. See 11 U.s.c. section 362(a) (stating an automatic stay goes into effect at the time a debtor files a bankruptcy petition). ~15 Given these circumstances, we conclude that the trial court . erred in granting summary judgment on the basis that the arbitration issue was not timely raised. There was no unreasonable delay and no conduct inconsistent with the intent to arbitrate. Fann, 179 Ariz. at 191-92, 877 P.2d at 291-92. Therefore, Bank has not met its burden of proving waiver through repudiation. ~16 Both parties have requested attorneys' fees on appeal. Bank has not prevailed and therefore we deny its request. Sport has failed to cite any authority and we likewise deny its request. See ARCAP 21(a)(2) (requiring a party requesting attorneys' fees to "specifically state the statute, rule, decisional law, contract, or other provision authorizing an award of attorneys' fees"). Sport is entitled, however, to an award of 5 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 44 of 120 BANK OFAMERICA v. SPORT COLLECTORS GUILD Decision of the Court costs incurred on appeal subject to compliance with Arizona Rule of Civil Appellate Procedure 21(a). CONCLUSION ~17 Based on the foregoing, we vacate the trial court's judgment entered on September 12, 2011, and remand for further proceedings consistent with this decision. Ruth A. Willingham. Clerk of the Court F'I LED: mjt 6 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 45 of 120 Exhibit "6" Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 46 of 120 SBAExpress Guaranty Req uest The following items are enclosed: fP 1. Copy of "Supplemental Information for PLP/SBAExpress Processing" (Part B) b0( i.r_i .... "'... fI dl.p., ..... froI!1y .lIld OMII , .. "01 Nvmb ... Ccn\""' 1hc bur4cn sh""ld but.lto U S Sm,l! Buft ..... Admioi.tndoo.416 'nd Dm omcer ror $11.... om.cor M nt ond 8!1dlltl. Nln 20l4Jll7H ;4679a .• J 6.00% 4!02.31 Fee;. O!h~r/""t 0.00 m1Q.Z3 i:05h Cur 031 O.QO 196171.21 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 79 of 120 Exhibit 7 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 80 of 120 SUPERIOR COURT OF ARIZONA MARICOPA COUNTY Michael K. Jeanes, Clerk of Court *'** Filed *** ~ ~IJ :H/S c.v 2010-014385 03/24/2015 HONORABLE MARK H. BRAIN CLERK OF THE COURT 1. Springston Deputy BANK OF AMERICA NA KESHA A HODGE v. SPORT COLLECTORS GUILD INC, et al. MARTA B WOLFINGER DISMISSAL CALENDAR The court has reviewed Defendants' Renewed Motion for Order to Show Cause (filed March 13, 20 IS). The motion in fact constitutes a motion for reconsideration, and the court has already explained (twice) that nothing in the arbitration agreement precludes plaintiff from seeking relief from a government agency under federal regulations. See Minute Entries dated February 4, 2015 and February 12,2015. Nothing presented by defendants in the latest motion changes that analysis. Accordingly, the motion is DENIED. Finally, because it appears obvious that the parties are not proceeding to arbitration on the claims between them, IT IS ORDERED placing this matter on the dismissal calendar for dismissal without further notice on April 15, 2015 absent a showing of good cause to further keep this matter on the court's docket. IT IS FURTHER ORDERED signing this minute entry as a formal written Order of the court. Docket Code 375 Form VOOOA Page 1 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 81 of 120 SUPERIOR COURT OF ARIZONA MARICOPA COUNTY CV 2010-014385 03/24/2015 HONORABLE MARK H. BRAIN JUDICIAL OFFICER OF THE SUPERIOR COURT Note: As of the date of this minute entry, Judge Roger Brodman is scheduled to take over Judge Brain's civil calendar (including this case) on June 22, 2015 as part of the court's standard judicial rotations. He is also moving into Judge Brain's chambers and courtroom on the 41hFloor of the East Court Building. The general phone number will change to 602-372-2943. Docket Code 375 Form VOOOA Page 2 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 82 of 120 Exhibit 8 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 83 of 120 1 2 3 4 5 • 7 8 1 10 11 12 13 14 15 16 17 18 11 20 21 22 23 24 25 2i 27 28 Michael K Jeanes, Clerk of Court *** Electronically Filed *** S. Bagnall, Deputy 4114/20159:31:00 AM Filing ID 6532193 Maria B. Wolfinger Arizona State Bar No. 011362 37 W. McLellan Blvd. Phoenix, AZ 85013 602-432-4338/602-274-6500 (fax) elian5@cox.net Attorney for Defendants IN THE SUPERIOR COURT OF ARIZONA MARICOPA COUNTY BANK OF AMERICA. N.A., an Arizona ) limited liability Company, ) ) Plaintiff, ) ) v. ) ) SPORT COLLECTORS GUILD, INC., ) and PATRICE LAGNIER, ) ) Defendants. ) ) ) No. CV2010-014385 DEFENDANTS' REQUEST FOR PERMISSION TO SUPPLEMENT THEIR FIRST AMENDED ANSWER, PURSUANT TO Ariz. R. Civ. P. 13(e) and 15(d) (Assigned to Honorable Mark H. Brain) Come now defendants, Sport Collectors Guild and Patrice Lagnier ("Sport Collectors"), through counsel, and move this Court that they be granted permission to supplement their First Amended Answer to set forth counterclaims that have matured and/or were acquired since the filing of their First Amended Answer on April 5, 2011, pursuant to Ariz. K Civ. P Rule 13(e) (counterclaim maturing or acquired after pleading) and Rule 15(d) (supplemental pleadings). 1. FACTS PERTINENT TO THIS MOTION. On July 28, 2003, the parties entered into a loan agreement in which they agreed that all claims shall be resolved in arbitration at the request of either party. This agreement was set forth in an arbitration provision which the parties had agreed was a material inducement to their entering into the 2003 agreement. 1 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 84 of 120 25 notwithstanding Sport Collectors invocation of the arbitration provision in the parties' 2003 agreement. On January 16, 2014, the Arizona Court of Appeals ruled that Sport 26, 27 1 2 3 4 5 6 1 8 I 11 11 12 13 14 15 16 11 18 l' 20 21 22 23 24 28 On March 25, 2009, Bank of America demanded payment from Sport Collectors in the principal amount of $146,798.61. On October 16, 2009, and again on March 31, 2010, Sport Collectors, properly and timely requested that Bank of America resolve its claim in arbitration pursuant to the arbitration provision in the parties' 2003 agreement. On June 11, 2010, Bank of America filed a Complaint against Sport Collector for breach of contract and replevin, claiming the principal sum of $146,798.6l. In its First Amended Answer filed on April 5, 2011, Sport Collectors alleged that Bank of America's failure to abide by the arbitration provision in the parties' 2003 agreement a was a breach of the 2003 agreement as the parties had agreed the arbitration provision was a material inducement to their entering into the 2003 agreement. Bank of America argued that Sport Collectors repudiated the arbitration provision and this Court agreed, entering summary judgment in favor of Bank of America on September 12,2011, in the amount of$146,798.61, plus costs and fees. On January 16, 2014, the Arizona Court of Appeals vacated the $146,798.61 judgment and ruled that Sport Collectors had timely and properly invoked the arbitration provision and that no repudiation occurred. II. DISCUSSION. Pursuant to Ariz. R. Civ. P 15(d), "Upon motion of a party the court may, upon reasonable notice and upon such terms as are just, permit the party to serve a supplemental pleading setting forth transactions or occurrences or events which have happened since the date of the pleading sought to be supplemented." "A claim which either matured or was acquired by the pleader after serving a pleading may, with the permission of the court, be presented as a counterclaim by supplemental pleading." Ariz. R. civ. P 13(e). On June 11, 2010, Bank of America filed the Complaint in this matter Collectors' invocation of the arbitration provision was timely and proper, and that no repudiation occurred. Sport Collectors has a counterclaim against Bank of America for 2 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 85 of 120 1 2 3 4 5 i 7 8 t 10 11 12 13 14 15 16 17 18 l' 20 21 22 23 24 25 2i 27 28 breach of the arbitration provision and breach of the parties' 2003 agreement, a claim that matured and was acquired upon the ruling of the Arizona Court of Appeals on January 16,2014, subsequent to the filing of Sport Collectors' First Amended Answer on AprilS, 2011. Sport Collectors has additional counterclaims against Bank of America for breach of the covenant of good faith and fair dealing, abuse of process, intentional infliction of emotional distress, and negligence. All of these claims are based on events that have happened since the filing of Sport Collectors' First Amended Answer on AprilS, 2011. III. CONCLUSION. For the foregoing reasons, defendants Sport Collectors Guild and Patrice Lagnier respectfully request that this Court grant their request to supplement their First Amended Answer with the counterclaims set forth at Exhibit 1. Dated this 14th day of April, 2015. /s/ Maria B. Wolfinger Maria B. Wolfinger Original electronically filed April 14, 2015, with the Clerk of the Court. Copy mailed via first-class mail on this 14rd day of April, 2015, to: Honorable Mark H. Brain 101 W. Jefferson East Court Building - Suite 413 Phoenix, AZ 85003 Kesha A. Hodge Poli & Ball 2999 N. 44th Street, Suite 500 Phoenix, AZ 85018 /s/ Maria B.Wolfinger Maria B. Wolfinger 3 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 86 of 120 Exhibit 9 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 87 of 120 Michael K. Jeanes, Clerk of Court *** Filed *** SUPERIOR COURT OF ARIZONA MARICOPA COUNTY CV 2010-014385 OS/27/2015 HONORABLE MARK H. BRAIN CLERK OFTHE COURT T. Springston Deputy BANK OF AMERICA N A KESHA A HODGE v. SPORT COLLECTORS GUILD INC, et a1. MARIA B WOLFINGER JUDGMENT OF DISMISSAL By minute entry dated March 24, 2015, the court placed this matter on the dismissal calendar for dismissal without further notice on April 15, 2015 absent a showing of good cause to further keep this matter on the court's docket. No such showing having been made, 1T IS ORDERED dismissing this matter without prejudice. The Request for Permission to Supplement Their First Amended Answer (filed April 14,2015) is DENIED as MOOT. IT IS FURTHER ORDERED signing this minute entry as a formal written Order of the court. HONORABLE MARK H. BRAIN JUDICIAL OFF1CER OF THE SUPERIOR COURT Docket Code 047 Form VOOOA Page 1 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 88 of 120 Exhibit 10 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 89 of 120 1 2 3 4 5 • 7 8, 18 11 12 13 14 15 i. 17 18 l' 20 21 22 23 24 25 2i 27 28 Michael K Jeanes, Clerk of Court *** Electronically Filed *** M. Mogel, Deputy 2/3120167:16:00 PM Filing ill 7174842 Maria B. Wolfinger Arizona State Bar No. 011362 5408 W. Grove Street Laveen, AZ 85339 602-432-4338/602-274-6500 (fax) elian5@cox.net Attorney for Defendants IN THE SUPERIOR COURT OF ARIZONA MARICOPA COUNTY BANK OF AMERICA. N.A., an Arizona) limited liability Company, ) No. CV2010-014385 ) Plaintiff, ) ) MOTION TO SET ASIDE v. ) THE COURT'S AUGUST 13, 2015, ) ORDER RE DEFENDANTS' SPORT COLLECTORS GUILD, INC.,) REQUEST FOR ATTORNEY'S FEES and PATRICE LAGNIER, ) ) Defendants. ) ) ) (Assigned to Honorable Roger Brodman) On August 13,2015, the Court denied defendants' request for attorney's fees after concluding that they were not the successful party in this action.' Under Rule 60( c)( 6), Ariz. R. Civ. P., defendants respectfully request that the Court set aside its August 13, 2015 Order and find that they are in fact the successful party in this action based on the holding in Britt v. Steffen,2 and qualify for an award of attorney's fees pursuant to A.R.S. § 12-341.01(A). In Britt v. Steffen, the Court held that a defendant against whom a contract action is dismissed without prejudice for lack of prosecution is the successful party and qualifies for an award of attorney's fees pursuant to A.R.S. § 12-341.01(A). Here, plaintiff brought a contract action against defendants in 2010, abandoned its claim in 2014, and 2 Exhibit "1". Britt v. Steffen, 220 Ariz. 265, 205 P.3d 357 (Ariz. App. 2008). 1 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 90 of 120 1 2 3 4 5 6 7 8 I 10 11 12 13 14 15 16 17 18 it 20 21 22 23 24 25 26 27 28 the contract action was dismissed without prejudice in 2015. Under Rule 60(c)(6), a party may request that the Court set aside an Order for any reason justifying relief from the operation of the judgment. The facts to which the parties agree and which are pertinent to this motion are set forth in the Arizona Court of Appeals' January 2014 decision attached at Exhibit "2" at pp. 2-4. In its ruling, the Court of Appeals held that this Court erred in finding that defendants had not timely raise their right to arbitration. The Court of Appeals vacated this Court's judgment entered on September 1, 2011, and remanded to this Court for further proceedings consistent with its decision. Exhibit "2" at p. 6.3 On March 19, 2014, this Court ordered that the parties proceed to arbitration on the remaining contract claim set forth in plaintiff's Complaint," but the action was dismissed without prejudice on February 6, 2015, after plaintiff abandoned its contract claim against defendants." In its February 2015 ruling denying defendants' motion for sanctions for plaintiff's failure to proceed to arbitration, the Court stated that if plaintiff "wished to abandon its direct claims against defendants, there is nothing to stop plaintiff from doing so (and abandonment of the direct claims via inaction is certainly consistent with the court of appeal's mandate)." Exhibit "5" at p. 1, para. 3. Defendants filed a Notice of Appeal based on plaintiff's failure to abide by this Court's March 2014 Order, but they are not pursuing that appeal.f The Court's June 2015 order dismissing this action without prejudice for lack of prosecution is the final order of this Court. For the above reasons, defendants request that this Court set aside its August 13, 2015 Order and grant their application for attorney's fees, attached at Exhibit "7" and which comport with the requirements of Schweiger v. China Doll Rest. Inc., 138 Ariz. 183 (App. 1983). 3 Prior to filing their appeal, defendants filed motions with this Court in an attempt to alert the Court that defendants had in fact timely raised their right to arbitration. when those motions were denied, defendants appealed to the Arizona Court of Appeals. 4 Exhibit "3". 5 Exhibit "4". 6 Exhibit "6". 2 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 91 of 120 /s/f1~E.W~ Maria B. Wolfinger Attorney for Defendants 1 Respectfully submitted this February 3,2016. 2 3 4 5 • 7 8, 18 11 12 13 14 15 1. 17 18 l' 20 21 22 23 24 25 2i 27 28 Copy mailed via first-class mail on this 3rd day of February, 2016, to: Original electronically filed February 3, 2016, with the Clerk of the Court. Honorable Roger Brodman 101 W. Jefferson East Court Building - Suite 413 Phoenix, AZ 85003 Kesha A. Hodge Poli & Ball 2999 N. 44th Street, Suite 500 Phoenix, AZ 85018 /s/f1~E.W~ Maria B. Wolfinger 3 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 92 of 120 Exhibit 1 I, . . i I i Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 93 of 120 Michael K. Jeanes, Clerk of Court *** Electronically Filed *** 08/1312015 8:00 AM SUPERIOR COURT OF ARIZONA MARICOPA COUNTY CV 2010-014385 08/1112015 HON. ROGER E. BRODMAN CLERK OF THE COURT D. Harding Deputy BANK OF AMERICA N A KESHA A HODGE v. SPORT COLLECTORS GUILD INC, et al. MARIA B WOLFINGER MINUTE ENTRY The Court has reviewed defendants' Application for Attorneys' Fees and plaintiffs Response. Defendants seek attorneys' fees of$103,360. Although defendants have appealed, this Court will rule on the attorneys' fees application in order for the court of appeals to have a complete record in this case. The Court views the attorneys' fees application as furthering the issues on appeal. The attorneys' fee request is denied for two reasons. First, defendants were not the prevailing party. Indeed, defendants have appealed Judge Brain's May27, 2015 judgment. There has never been a decision on the merits. Moreover, a review of the file discloses that defendants appeared to lose the most recent rounds of motions litigated before Judge Brain, including defendants' multiple requests for sanctions and motions for reconsideration. Second, the fees application is insufficient under Schweiger v. China Doll Rest. Inc., 138 Ariz. 183 (App. 1983). Given the block billing, this Court is in no position to determine whether the request is reasonable . . IT IS ORDERED denying defendants' request for attorneys' fees. Docket Code 023 Form VOOOA Page 1 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 94 of 120 .Exhibit 2 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 95 of 120 IN THE ~ourt of ~ppeal5' STATE OF ARIZONA DIVISION ONE BANK OF AMERICA, N.A.-, an Arizona limited liability ) ) ) ) Plaintiff/Appellee, ) ) ) ) ) ) ) ) ) ---------------------------------) company, Vi SPORT COLLECTORS GUILD, INC., an Arizona corporation; PATRICE LAGNIER, an individual, Defendants/Appellants. MANDATE Court of Appeals Division One No. 1 CA-CV 12-0804 Maricopa County Superior Court No. CV2010-014385 TO: The Maricopa County Superior Court and the Honorable Mark H Brain, Judge, in relation to Cause No. CV2010-014385. This cause was brought before Division One of the Arizona 'Court of Appeals in the manner prescribed by law. This Court rendered its MEMORANDUM DECISION and it was filed on January 16, 2014. The time for the filing of a motion for reconsideration has expired and no motion was filed. The time for the filing of a petition for review has expired and no such petition was filed. NOW, THEREFORE, YOU ARE COMMANDED to conduct such proceedings as required to comply with the MEMORANDUM DECISION of this court; a copy of which is attached hereto. I, Ruth A. Willingham, Clerk of the Court of Appeals, Division One, hereby certify the attachment to be a full and accurate copy of the MEMORANDUM DECISION filed in this cause on January 16, 2014. IN WITNESS WHEREOF, I hereunto set my hand and affix the official seal of the Arizona Court of Appeals, Division One, on February 24, 2014. (SEAL) RUTH WILLINGHAM, CLERK By Dep~lerk Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 96 of 120 NOTICE: NOT FOR PUBUCATION. UNDER ARIZ. R. SUP. CT. l11(c), THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED. IN THE ARIZONA COURT OF APPEALS DIVISION ONE BANK OF AMERICA, N.A., an Arizona limited liability company, Plaintiff/Appellee, v. SPORT COLLECTORS GUILD, INC., an Arizona corporation, Defendant/Appellant. No.1 CA-CV 12-0804 FILED 1-16-2014 Appeal from the Superior Court in Maricopa County No. CV2010-014385 The Honorable Mark H. Brain, Judge V ACATED AND REMANDED COUNSEL Bettwy & Wolfinger, Phoenix By Maria B. Wolfinger Counsel for Defendant/Appellant Poli & Ball, P.L.c., Phoenix By Michael N. Poli and Kesha A. Hodge Counsel for Plaintiff/Appellee Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 97 of 120 BANK OF AMERICA v. SPORT COLLECTORS GUILD Decision of the Court MEMORANDUM DECISION Judge Michael J. Brown delivered the decision of the Court, in which Presiding Judge Andrew W. Gould and Judge Donn Kessler joined. B R OWN,Judge: ~1 Sport Collectors Guild, Inc. ("Sport") appeals the trial court's order granting summary judgment in favor of Bank of America, N.A. ("Bank"). 1 Because Sport has not repudiated its right to arbitrate, we vacate the court's order and remand for further proceedings. BACKGROUND ~2 Sport received a $150,000 line of credit from Bank in 2003. In addition to executing a promissory note, Sport and Bank entered into a Commercial Security Agreement granting Bank a security interest in Sport's assets to secure payment. As further assurance, Patrice Lagnier executed a Commercial Guaranty. The promissory note stated that "[a]t the request of any party to this agreement, any Claim shall be resolved by binding arbitration in accordance with the Federal Arbitration Act, (Title 9, U.S. Code) (the" Act")." ~3 The parties extended the line of credit by amendment in 2006. The amendment reiterated the applicability of the Act, and stated that the American Arbitration Association rules and procedures for financial services disputes would apply. It further provided that the arbitration provision concerns the resolution of any controversies or claims between the parties, whether arising in contract, tort or by statute, including but not limited to controversies or claims that arise out of or relate to: (i) this agreement (including any 1 Although Patrice Lagnier is listed on the notice of appeal, he is not represented on appeal and has not submitted briefing. Additionally, in light of Lagnier's discharge under the bankruptcy code, Bank requests that we affirm the judgment only as to Sport. We therefore amend the caption to reflect that Sport is the only party appealing the trial court's judgment .. 2 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 98 of 120 BANK OF AMERICA v. SPORTCOLLECTORSGUILD Decision of the Court renewals, extensions or modifications); or (ii) any document related to this agreementr.j The dispute resolution provision was a "material inducement for the parties entering into this agreement.'~ ~4 In March 2009, Bank demanded payment of Sport's outstanding balance of $146,798.61. After a flurry of correspondence, Sport wrote to Bank's counsel in October 2009, stating that if Bank intended to move forward with its demand for payment, then Bank should adhere to the arbitration provision set forth in the promissory note. ~5 Bank subsequently informed Sport, in a March I, 2010 letter, that it was willing to consider restructuring the Loan, but that Sport would have to provide updated financial information. Sport supplied this information on March 31, 2010. In an accompanying letter to Bank's counsel of the same date, Sport again noted that .the parties' loan contract included a binding arbitration provision. ~6 Bank filed suit against Sport and Lagnier ("Defendants," except as otherwise noted) for breach of contract/ guaranty and replevin on June 11, 2010. In their answer, signed only by Lagnier in both his individual capacity and as a representative of the company, Defendants did not mention arbitration. Sport petitioned for a Chapter 11 bankruptcy on July I, 2010, but the bankruptcy court dismissed the case without a discharge on August 3, 2010. Lagnier petitioned for Chapter 7 bankruptcy on July 2, 2012 and was granted a discharge on October 16, 2012. ~7 None of the parties conducted discovery or exchanged Rule 26.1 disclosure statements. In February 2011, Bank moved for summary judgment. In response, through counsel, Defendants alleged Bank materially breached the loan agreement by failing to pursue arbitration. Alternatively, Defendants argued that Bank was equitably estopped by prior representations, and the commercial frustration doctrine discharged Defendants' obligation to perform. On the same date, Defendants filed an amended answer, raising the binding arbitration provision as an affirmative defense and alleging that Bank's failure to abide by the provision constituted a breach. ~8 Bank replied that Defendants had waived and repudiated the right to the arbitration term by failing to raise it in the answer, and then failing to invoke it for several months thereafter. The trial court agreed, characterizing the arbitration request as the "only issue" of "any 3 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 99 of 120 BANK OF AMERICA v. SPORT COLLECTORS GUILD Decision of the Court potential merit," but finding Sport's invocation of the arbitration clause untimely. The court therefore granted summary judgment. It then filed a signed judgment, without Rule 54(b) language, holding Defendants jointly and severally liable for breach of contract. Defendants moved for a new trial. Before the trial court denied that motion, Defendants filed a notice of appeal. This court dismissed the appeal, citing the judgment's failure to resolve the replevin claim and lack of Rule 54(b) language. On remand, Bank agreed to the dismissal of its replevin claim, and the trial court issued a signed order. Defendants timely filed a notice of appeal. DISCUSSION ~9 A party may lose the right to arbitrate by failing to timely assert -it, Forest City Dillon, Inc. v. Super. Ct. (Carruth), 138 Ariz. 410, 412, 675 P.2d 297, 299 (App. 1984); see generally Cox. v. Ocean View Hotel Corp., 533 F.3d 1114, 1121 (9th Cir. 2008) (applying state law and determining whether repudiation had occurred in a case governed by the FAA). The untimely assertion of the right to arbitration raises three potential scenarios: (1) a repudiation/waiver; (2) the failure of a procedural condition; or (3) the failure of a condition precedent to activating the clause. City of Cottonwood v. James L. Fann Contracting, Inc., 179 Ariz. 185, 189,877 P.2d 284, 288 (App. 1994).2 ~10 The parties focus upon whether Sport has repudiated the right to arbitrate. "Because repudiation calls into question the existence of the arbitration agreement, repudiation is an issue for the court." Id. at 190, 877 P.2d at 289; see Bolo Corp. v. Homes & Son Constr. Co., 105 Ariz. 343, 345-46, 464 P.2d 788, 790-91 (1970). We review this issue de novo. In re Estate of Cortez, 226 Ariz. 207, 210, ~ 3, 245 P.3d 892, 895 (App. 2010). ~11 Repudiation occurs when a party engages in "conduct preventing arbitration, proceeds at all times in disregard of arbitration, expressly agrees to waive arbitration, or unreasonably delays requesting arbitration." In re Noel R. Shahan Irrevocable & Inter Vivos Trust, 188 Ariz. 74, 77-78, 932 P.2d 1345, 1348-49 (App. 1996). A claim of repudiation based upon unreasonable delay must be supported by "clear evidence of 1) prejudice suffered by the other party and 2) a demand for arbitration so ,-, 2 A condition precedent must be performed before the contract becomes effective. Fann, 179 Ariz. at 189 n.4, 877 P.2d at 288 n.4. The condition must expressly and clearly appear in the contract. Id. Bank has not argued that a condition precedent exists here. 4 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 100 of 120 BANK OF AMERICA v. SPORTCOLLECTORSGUILD Decision of the Court egregiously untimely and inconsistent with an intent to assert the right to arbitrate that an intentional relinquishment can be inferred." Fann, 179 Ariz. at 192, 877 P.2d at 291. Thus, Bank bears a "heavy" burden in establishing that Sport repudiated its right to arbitration. Id. at 192 n.l0, 877 P.2d at 291 n.l0 (citing Rancho Pescado, Inc. v. Nw. Mut. Life Ins. Co., 140 Ariz. 174, 181, 680P.2d 1235,1242 (App. 1984)). ~12 Bank contends that Sport waived its right to arbitrate by filing its .answer without raising arbitration as an affirmative defense. We disagree. ~13 The answer Defendants submitted on July 6, 2010 was signed only by Lagnier. He purported to sign it on behalf of Sport, but was not authorized to do so. See Ramada Inns, Inc. v. Lane & Bird Advertising, Inc., 102 Ariz. 127, 128, 426 P.2d 395, 396 (1967) (explaining that, absent statutory authority, a company 1/cannot practice law even in its own behalf" and" cannot appear in court by an officer who is not an attorney"). Thus, the answer was invalid as to Sport. ~14 Because Sport did not file an answer to the complaint at the time Lagnier submitted his answer, the first time Sport made an appearance in the litigation was on March 23,2011, when its attorney filed her notice of appearance. Sport then filed its response to the summary judgment motion and its "amended" answer, both of which raised the arbitration issue. Moreover, as reflected in the record before us, at the time Lagnier filed his answer, the automatic bankruptcy stay was in effect and the litigation was therefore on hold. See 11 U.s.c. section 362(a) (stating an automatic stay goes into effect at the time a debtor files a bankruptcy petition). ~15 Given these circumstances, we conclude that the trial court erred in granting summary judgment on the basis that the arbitration issue was not timely raised. There was no unreasonable delay and no conduct inconsistent with the intent to arbitrate. Fann, 179Ariz. at 191-92, 877 P.2d at 291-92. Therefore, Bank has not met its burden of proving waiver through repudiation. ~16 Both parties have requested attorneys' fees on appeal. Bank has not prevailed and therefore we. deny its request. Sport has failed to cite any authority and we likewise deny its request. See ARCAP 21(a)(2) (requiring a party requesting attorneys' fees to "specifically state the statute, rule, decisional law, contract, or other provision authorizing an award of attorneys' fees"). Sport is entitled, however, to an award of 5 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 101 of 120 BANK OF AMERICA v. SPORT COLLECTORS GUILD Decision of the Court costs incurred on appeal subject to compliance with Arizona Rule of Civil Appellate Procedure 21(a). CONCLUSION ,17 Based on the foregoing, we vacate the trial court's judgment entered on September 12, 2011, and remand for further proceedings consistent with this decision. 6 Ruth A. Willingham. Clerk of the Court FILE 0: mjt Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 102 of 120 Exhibit· 3 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 103 of 120 Michael K. Jeanes, Clerk of Court *** Electronically Filed *** 03120/20148:00 AM SUPERIOR COURT OF ARIZONA MARICOPA COUNTY CV 2010-014385 03119/2014 HONORABLE MARK H. BRAIN CLERK OF THE COURT A. Melchert Deputy BANK OF AMERICA N A KESHA A HODGE v. SPORT COLLECTORS GUILD INC, et al. MARlA B WOLFINGER INACTIVEIDISMISSAL CALENDAR The Court has received a Mandate from the Court. of Appeals, as well as Defendants' Request for Status Conference (filed March 10,2014). There is no need for a status conference-the Court of Appeals has directed this Court to enforce the arbitration agreement. Accordingly, IT IS ORDERED that the parties proceed to arbitration on the claims set forth in the Complaint.' IT IS FURTHER ORDERED staying this matter and placing it on the inactive calendar for dismissal without further notice after December 31, 2014 unless (a) a party has submitted an arbitration award to the Court for confirmation prior to that date or (b) the Court has extended this deadline. Effective April 15, 2014 new civil rules and forms are in effect for managing cases moving to trial. Be sure to review the new Civil Rules 16,26,37,38, 72 through 74 and 77. 1 Defendants' request suggests that they have an "anticipated counterclaim" against a non-party, but they have not moved to amend their pleadings. Docket Code 078 Form VOOOA Page 1 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 104 of 120 Exhibit 4- Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 105 of 120 Michael K. Jeanes, Clerk of Court *** Filed *** 06/03/2015 8:00 AM SUPERIOR COURT OF ARIZONA MARICOPA COUNTY CV 2010-014385 05/27/2015 HONORABLE MARK H. BRAIN CLERK OF THE COURT T. Springston Deputy BANK OF AMERICA N A KESHA A HODGE v. SPORT COLLECTORS GUILD INC, et al. MARIA B WOLFINGER JUDGMENT OF DISMISSAL By minute entry dated March 24, 2015, the court placed this matter on the dismissaL calendar for dismissal without further notice on April 15, 2015 absent a showing of good cause to further keep this matter on the court's docket. No such showing having been made, IT IS ORDERED dismissing this matter without prejudice .. The Request for Permission to Supplement Their First Amended Answer (filed April 14, 2015) is DENIED as MOOT. IT IS FURTHER ORDERED signing this minute entry as a formal written Order of the court. / s / HONORABLE MARK H. BRAIN HONORABLE MARK H. BRAIN JUDICIAL OFFICER OF THE SUPERIOR COURT Docket Code 047 Form VOOOA Page 1 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 106 of 120 Exhibit 5 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 107 of 120 Michael K. Jeanes, Clerk of Court *** Filed *** 02/06/2015 8:00 AM SUPERIOR COURT OF ARIZONA MARICOPA COUNTY CV 2010-014385 02104/2015 HONORABLE MARK H. BRAIN { CLERK OF THE COURT T. Springston Deputy BANK OF AMERICA N A KESHA A HODGE v. SPORT COLLECTORS GUILD INC, et al. MARIA B WOLFINGER RULING This matter came before the court on Defendants' Motion for Order to Show Cause re: Contempt and Sanctions pursuant to A.R.S. § 12-864. Having fully considered the parties' papers, the motion is DENIED. By way of brief explanation, the court notes as follows. Through this action, plaintiff seeks to collect on a debt. There are no counterclaims. The court originally entered a summary judgment in plaintiffs favor, but the court of appeals reversed this decision, finding that the dispute was subject to arbitration due to the patties' agreement. The court of appeals remanded "for further proceedings consistent with this opinion." Accordingly, this court instructed the parties to proceed with arbitration, and placed the matter on the inactive calendar for dismissal without further notice after December 31, 2014 unless a party submitted an arbitration award to the court for confirmation prior to that date or the court extended the deadline. See Minute Entry dated March 20,2014. Defendants now complain; first, that plaintiff has not proceeded to arbitration. That is plaintiff s choice; if it wished to abandon its direct claims against defendants, there is nothing to stop plaintiff from doing so (and abandonment of the direct claims via inaction is certainly consistent with the court of appeals' mandate). Such an action is certainly no basis for a finding of contempt. Docket Code 019· Form VOOOA Page 1 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 108 of 120 SUPERIOR COURT OF ARIZONA MARICOPA COUNTY CV 2010-014385 02/04/2015 Second, defendants complain that plaintiff has submitted a "guaranty request" to the Small Business Administration pursuant to a federal program, and that defendants will be liable to the government pursuant to federal regulations if the government honors this request. Again, there is nothing to stop plaintiff from seeking relief from the SBA outside of arbitration, and the fact that doing so might have collateral consequences for defendants is irrelevant. IT IS FURTHER ORDERED signing this minute entry as a formal written Order of the court. / S / HONORABLE MARK H. BRAIN HONORABLE MARK H. BRAIN JUDICIAL OFFICER OF THE SUPERIOR COURT Docket Code 019 Form VOOOA Page 2 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 109 of 120 Exhibit 6 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 110 of 120 DIVISION ONE FILED: 08/26/2015 RUTH A. WILLINGHAM, CLERK" BY:PMC RUTH YllILL1NGHAM CLERKOFTHECOURT qrOttt"t of~pptal5 STATE OF ARIZONA DMSIONONE STATE COURTS BUILDING 1501 WEST WASHINGTON STREET PHOENIX ARIZONA 85007 Phone (OOZ}542-4821 Fax (502) 542-48033 August 26, 2015 Michael K Jeanes, Clerk Maricopa County Superior Court 201 West Jefferson Phoenix, Arizona 85003 Dear Mr. Jeanes, RE: 1 CA-CV 15-0497 BANK OF AMERICA v. SPORT et al. Maricopa County Superior Court No. CV2010-014385 Pursuant to direction from the court and pursuant to A.R.S.§12-322A, the above entitled and numbered case has been abandoned. There is no record to be returned to your court. Section 12-322A provides as follows: "If the fee is not paid within the ten days thereafter, the appeal shall be deemed abandoned'and the record returned to the Court from which it came and the judgement may be enforced as if no appeal had been taken." RUTH WILLINGHAM, CLERK By pmc Deputy Clerk c: Michael N Poli/Kesha A Hodge Maria B Wolfinger Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 111 of 120 Exhibit 7 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 112 of 120 eighteen (18) and am competent to attest to the facts set forth within this affidavit. 1" 2. I am an attorney licensed to practice law in the State of Arizona. I was first 20' admitted to the State Bar of Arizona in 1987, and have remained a member in good 23· have been a sole practitioner with the law firm, Law Office of Maria B. Wolfinger (Bettwy 2ifour-yeat period beginning in April 2011 and ending in April 2015, and have personal 27 knowledge of the work performed and the contractual billing arrangement with 1 2 3 4 5 i 7 8, 18 11 12 13 14 15 1i 17 18 . 21 22 24 25 28 Maria B. Wolfinger Arizona State Bar No. 011362 5408 W. Grove Street Laveen,JLl 85339 602-432-4338/602-274-6500 (fax) elian5@cox.net Attorney for Defendants IN THE SUPERIOR COURT OF ARIZONA MARICOPA COUNTY No. CV2010-014385BANK OF AMERICA. N.A., an Arizona ) limited liability Company, ~ ) ) ) ) SPORT COLLECTORS GUILD, INC., ~ and PATRICE LAGNIER, ) ) ) ) Plaintiff, DEFENDANTS' APPLICATIONFOR ATTORNEY'S FEES PURSUANT TO A.R.S. § 12-341.01(A)v. Defendants. (Assigned to Honorable Roger Brodman) I, Maria B. Wolfinger, being first duly sworn, under oath, depose and say: 1. This affidavit is based upon my own personal knowledge. I am over age standing since that time. Since my admission to the Bar, I continually have practiced law in Maricopa County, Arizona. At all times material to the above captioned proceedings, I & Wolfinger). There are no other employees within the law firm: 3. I represented defendants in the above-captioned matter during the Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 113 of 120 claims in arbitration, defendants submitted four motions in their endeavor to apprise the Court that it had erred in its ruling, but all of their motions were denied. After appealing this Court's ruling, the Court of Appeals held that this Court had erred in finding that i4, defendants had not timely raised their right to arbitration, vacated the judgment entered in is' 23 . based on plaintiff s failure to abide by this Court's March 2014 Order, but they are not pursuing that appeal. (emphasis added.) 7. In Britt v. Steffen, 220 Ariz. 265, 205 P.3d 357 (Ariz. App. 2008), the Court of i 2 3 4 S • 7 8,, il it i2 i3 i. 17 i8 it 20 2t 22 24 25 2. 2'i 28 defendants in this action. 4. My current hourly billing rate is $320.00 per hour, a billing rate that is consistent with the hourly billing rates charged by my peers in Maricopa County, Arizona, for similar services. 5. ,In connection with these proceedings, defendants have incurred attorney fees as detailed within the billing statement attached hereto as Exhibit ''A ". 6. The attorneys' fees which defendants have incurred in connection with this action are reasonable under the circumstances. All fees incurred by defendants were necessary and appropriate: Plaintiff brought this litigation in 2010 despite defendants' having timely invoked the arbitration provision in the parties' agreement. After this Court ruled in 2011 that defendants had not timely raised their right to have plaintiff resolve its 2011, and remanded to this Court for further proceedings consistent with its decision. After this Court ordered that the parties proceed to arbitration, plaintiff chose to abandon its remaining contract claim against defendants, and the action was dismissed without prejudice. Defendants requested this Court to sanction plaintiff for failing to abide by the Court's order to proceed to arbitration, but the Court denied their request, stating that if plaintiff "wished to abandon its direct claims against defendants, there is nothing to stop plaintiff from doing so (and abandonment of the direct claims via inaction is certainly consistent with the court of appeal's mandate)." Defendants filed a Notice of Appeal Appeals held that a defendant against whom a contract action is dismissed without prejudice for lack of prosecution is the successful party and qualifies for an award of attorney's fees pursuant to A.R.S. § 12-341.01(A). Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 114 of 120 t 2 3 4 5 6 7 8, to it 12 13 t4 t5 16 17 t8 1t 20 21 22 . . ~ fJ1 SUBSCRIBED AND SWORN TO before me thls~ day of February 2016, by ~ "Notary Public .Maria B. Wolfinger. Original electronically filed this 1~ay of February _,2016, with the Clerk ofthe Court. Copy mailed via first-class mail on this jrJfday of February, 2016, to: Honorable Roger Brodman 101 W. Jefferson East Court Building - Suite 413 Phoenix, AZ 85003 Kesha A. Hodge Poli & Ball 2999 N. 44th Street, Suite 500 Phoenix, AZ 85018 /s/ Maria B.Wolfmger 23 . Maria B. Wolfinger 24. 25 26 27 28 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 115 of 120 Exhibit A Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 116 of 120 Maria B. Wolfinger, Attorney at Law Bank of America v. Sport Collectors Guild and Patrice Lagnier. Date Attv Task Hours $ Value Task 03/24/2011 MBW Begin draft of Amended Answer to Plaintiff s Complaint 6.0 1,920.00 03/25/2011 MBW Continue work on Amended Answer: 6:0 1,920.00 03/27/2011 MBW Begin draft of Response/Statement of Facts to plaintiffs Motion for Summary Judgment 6.0 1,920.00 03/28/2011 MBW Continue work on Response/Statement of Facts. 7.0 2,240.00 04/0112011 MBW Continue work on Response/SOF to Motion for Summary 5.0 1,600.00 Judgment 04/02/2011 MBW Continue work on Amended Answer 5.0 1,600.00 04/05/2011 MBW Final draft and filing of Amended Answer 4.0 1,280.00 04/0512011 MBW Final draft and filing of Response and Statement of Facts re plaintiff s Motion for Summary Judgment 06/01/2011 MBW Preparation of motion for evidentiary hearing on plaintiffs failure to disclose unfavorable information in its affidavit in support of its Motion for Summary Judgment about the dispute resolution provision in the parties' 2003 agreement 7.0 2,240.00 08/02/2011 MBW Preparation of motion to set aside Judge Brain's Minute Entry dated May 16, 2011, in which he concluded that defendants failed to timely raise their right to arbitration 7.0 2,240.00 10/03/2011 MBW Preparation of motion for new trial re the judgment entered by the Court on September 12,2011. 7.0 2,240.00 1012612011 MBW Begin preparation of Opening Brief in defendants' first appeal to the Arizona Court of Appeals on the issue of whether the trial court erred in (1) finding that defendants had not timely requested plaintiff to resolve its breach, of contract and replevin claims against defendants pursuant to the arbitration provision in the parties' 2003 agreement, and (2) granting Summary Judgment to Bank of America in the amount of $146,798.61 (plus costs and fees). 8.0 2,560.00 10/28/2011 MBW Continue work on defendants' Opening Brief 7.0 2,240.00 10/30/2011 MBW Prepare final draft of defendants' Opening Brief 6.0 1,920.00 1 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 117 of 120 11115/2012 MBW 11125/2012 MBW 11113/2014 MBW Oral Argument on defendants' Motion to Vacate, and the Order by the Honorable Mark Brain that defendants' counsel personally appear and show cause why she should not be sanctioned or otherwise held in contempt for repeatedly raising the same argument that the Court has previously rejected, namely, that defendants had timely requested Bank of America to resolve its breach of contract and replevin claims against defendants pursuant to the arbitration provision in the parties'.2003 agreement. 3.0 Preparation of Opening Brief in defendants' first appeal to the Arizona Court of Appeals on the issue of whether the trial court erred in (1) finding that defendants had not timely requested plaintiff to resolve its breach of contract and replevin claims against defendants pursuant to the arbitration provision in the parties' 2003 agreement, and (2) granting Summary Judgment to Bank of America in the amount of$146,798.61 (plus costs and fees). 8.0 Preparation of Petition for Order to Show Cause and Sanctions against plaintiff for failing to abide by the trial court's Order to proceed to arbitration on its remaining contract claim against defendants, and instead, seeking to recover $146,798.61 (plus costs and fees) from the Small Business Administration (SBA) after the Arizona Court of Appeals vacated the $i46,798.61 Judgment, ruling that defendants had timely raised their right to have plaintiff resolve its remaining contract claim against Defendants in arbitration proceedings per the arbitration provision in the parties' 2003 agreement . 6.00 Total hours: 98.00 98 hours at $320.00 per hour: $31,360.00 2 960.00 2,560.00 1,920.00 31,360.00 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 118 of 120 Exhibit 11 Case 2:16-cv-02229-ROS Document 11-1 Filed 08/05/16 Page 119 of 120 DIVISION ONE FILED: 08/2612015 ROTH A. WILLINGHAM, CLERK BY: PMC RUTH WllllNGHAM CLERK OF THE COURT